Insuring your small office/home office (SOHO)
There has been an explosion in the number of home-based businesses in recent years – but an alarming number of home business owners aren’t properly insured.
Ask yourself the following questions:
- In the unfortunate event of theft or fire, for example, would $2,500 cover your office furniture, printers, computers, machine, phone system, inventory, etc.?
- If your laptop is stolen from your car or hotel room, will you be satisfied with a $250 claim settlement?
- Can you ensure that clients or associates will never visit you at your “office”?
If you answered “no” to any or all of the above, you need to revisit your insurance coverage for your business.
What kind of coverage do you need?
- Property – protection for your equipment and inventory from theft, fire, etc.
- Liability – protection in the event that a client or supplier is injured while on the premises
- Business Interruption – if a fire broke out in your home and your office was destroyed along with important records rendering you unable to work, this type of coverage will compensate your for lost income, and pay to recreate your records.
How to buy the right coverage:
Here are four different ways to buy insurance coverage for your home business.
- Endorsements to your homeowners insurance: This is the least expensive way to boost your homeowners insurance to better cover your office equipment. Endorsements are attachments to a policy that either add coverage or expand the limits of existing coverage. Some companies have now developed endorsements for business liability. For instance, you may be able to double the standard coverage in your homeowner policy for business equipment.
Typically this method is for very small businesses or small home offices (the type of businesses that don’t typically have employees or clients in the house). If you operate a larger business with a greater investment in equipment or generate revenues in excess of $250,000 annually, you will want to discuss one of the following options with an agent.
- Commercial Package policies with individual sections for business property, liability and business income protection. This approach allows you to select the appropriate coverage in each area for your business, each coverage is priced individually on an à la carte basis.
- An In-Home Policy is the Insurance Industry’s reply to this exploding segment of the business community. Essentially it’s a mini version of the Business Owner’s Package policy or a BOP. It provides a broader spectrum of coverage than the last option at a more affordable price than a standard BOP. Coverage includes expanded coverage for business equipment, general liability up to $1 million, income lost due to damage to your home, some coverage for loss due to damaged records, money lost on premises, and advertising liability. Talk to us about availability of this solution in your state.
- And finally, home based business owners may choose to purchase a BOP. Business Owners’ Package policies are designed specifically for small businesses. BOP’s are crafted for specific types of businesses and provide a broad spectrum of coverage – usually at a more affordable price than a Commercial Package Policy. Typical coverages under a BOP include property, liability, lost income, record recreation and coverage for money and securities.
- Are you using your vehicle for business? If you’re making trips to your clients’ offices, delivering or picking up supplies, you need to ensure that any accidents that occur on business-related travel are covered by your auto policy. Even if your employees are just using their own car to pick up lunch or go to the bank, you have an exposure if they are considered “on company time”. Please contact Ellis Insurance to determine if you simply need to add business travel to your personal policy or whether you require a separate business policy.
- Health Insurance covers your medical costs if you’re suddenly out of commission due to health reasons.
- Are you hiring? If your home based company is growing, don’t forget that you’ll need workers compensation insurance. This mandatory coverage pays for medical costs for employees injured on the job and disability compensation if they are unable to work as a result. How do you get the right protection for your home business? Naturally you want the best coverage for the best price. The right package has comprehensive coverage without gaps and avoids overlap with your homeowner’s policy.
- Are you consulting? Many people who run a business out of their home are engaged in consulting work. Even if you only consult part-time you still probably have a significant professional liability exposure. Let us work with you to make sure that you are properly insured in case of a lawsuit.
- What about disability? If you are unincorporated or an excluded executive officer of a corporation, you are not covered by Workers Compensation. You should strongly consider a long- term disability program to meet your personal finanacial commitments in the case that you are unable to work.
Get an Ellis Insurance Tune-up, our exclusive 4-Step systematic process for eliminating gaps & inconsistencies, reducing premium, and improving coverage. There’s no obligation, and if you have any questions, please contact us at firstname.lastname@example.org.