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Home-based businesses require more coverage

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by Ann Bucy

SBJ Contributing Writer

You've recently decided to start a home-based distributorship business. You purchase product inventory and stock the materials in your garage or spare room. What happens if your house burns down? Is that stock automatically covered under your homeowners insurance? The answer may surprise you.

"More and more insurance companies are coming out with endorsements on homeowners policies," to cover home-based-business assets, said Byron Robison, vice president of Great Southern Insurors. "The cost depends on the contents you're insuring."

He said Great Southern's premiums start at $150. The coverage available is comprehensive, all-risk coverage on business personal property and can include up to $1 million in business liability protection.

With this policy, certain basic requirements must be met. For example, the business cannot be located in a mobile home, and it needs to be operated by the insured or an immediate family member.

According to Mark Patrick, of Thomison Insurors, the business of insuring the equipment and stock people have at home is growing. "There are more at-home-based businesses due to corporate downsizing and a growing interest in entrepreneurship."

He said he believes the real growth in that market sector has taken place in the last two years. "It's easier to work at home and still be productive with all this new technology: the Internet, modems and fax machines," Patrick said.

He said he also sees the home-business policy endorsement as an area that's often overlooked. "People have a lot of exposure they may not be covering properly. They need to communicate with their agent, who should educate them and direct them in their situation."

Patrick also suggested checking with your agent if you are employed by a company to do work in your home. For instance, if something happens to the company-owned computer you use, who pays for the damage you or the company? Don't assume anything, he said.

Patrick agreed with Robison that the cost of the policy depends on what is covered. Also, like Great Southern, Thomison's coverage is dependent upon certain eligibility requirements.

While policy endorsements are useful for insuring business assets, some companies offer a separate business policy for the home-based business, such as that offered under State Farm's Business in the Home program.

State Farm Agent Burlin Hefley said he recommends a separate policy if the businessperson is insuring $1,000 or more of equipment and/or inventory in the home, and $250 or more off premises, in a storage unit, for example.

State Farm's Business in the Home program started about a year ago. "There's a great need for this," Hefley said. "A lot of people don't understand that they need this additional coverage."

Under the program, the home-based businessperson's property is insured against accidental direct physical loss from any cause not specifically excluded in the policy. This covers legal liability because of bodily injury, property damage, personal injury or advertising injury, according to State Farm.

The policy will provide comprehensive general liability coverage up to $300,000 per occurrence, $600,000 annual aggregate, with higher limits available. A $5,000 per person medical-payments coverage applies to persons other than owners or employees injured on the premises, according to State Farm.


If your house burns and takes your home-based business equipment and inventory with it, a homeowners policy may not sufficiently cover the loss. Many insurance companies now offer endorsements specifically for home-based businesses.[[In-content Ad]]


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