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The
United States has experienced a rapid growth in home-based businesses
in the last decade. The U.S. Census Bureau reports that there are now
more than 11 million home-based businesses in the country, a figure
that is expected to rise in the coming years.
But
if you run a home business, losses associated with that business may
not be covered under your homeowners policy unless special coverage
endorsements are added. Some insurers sell an endorsement that covers
losses associated with a home-based business. We can quickly find out
if such an option is available.
What
if you are operating a home-based business without your insurer's
knowledge? Suppose you had a small fire that damaged your home office
and computer and resulted in some lost income. Once your insurer sends
an adjuster who, while investigating your claim, discovers your
business, your insurer may deny some or all of the claim because of
business-related exclusions and restrictions found in many homeowners
policies.
Conversely,
if you paid the additional premium to add a home-based business
endorsement to your homeowners policy or you bought a businessowners
policy (BOP), your loss would likely be covered—even the loss of
income. (A BOP is a separate policy form designed to insure the
property and liability exposures of small businesses.)
And
do not forget about liability. If you have business visitors in your
home and they get hurt, many insurers' homeowners policies will not
cover those injuries because of the business-related loss exclusion
found in the personal liability section of the policy. Again, it is
necessary to purchase a special endorsement to the homeowners policy or
a separate BOP. Also, if your activities give rise to any type of
errors and omissions or professional liability exposures, they are not
likely to be covered under either your homeowners policy or a BOP. A
separate errors and omissions (E&O) policy will need to be
arranged for this loss exposure.
Different
insurance companies have different criteria for excluding
business-related losses from their policies. If your current insurer
cannot respond to your coverage needs, we can present several options
to you.
But
the important thing to remember is this: if you are running a business
out of your home, call us. We will work hard to assure you are properly
protected.
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Copyright 2009
International
Risk Management Institute, Inc.
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