Insurance Corner : Your home based business - Should you move up to a small business insurance policy?

If you are like most new home-business owners, you may think your homeowner or renter's insurance coverage will be enough. That is regrettable, because in many instances your homeowner's policy will not be adequate.

Your homeowner's policy may exclude business use of your home entirely. Even if it does cover some business use, coverage for business contents is likely to be for very small amounts. $2,500 business contents on premises, and as little as $250 for losses off-site (such as a stolen laptop), are typical amounts.

Plus there is the vital issue of business data. Suppose a scenic stream runs across the back of your property…and it floods in a hurricane and floats off the books, files, and software needed to run your business, bill your clients, and collect fees?

Unless those things are covered under a home office or business owner's business policy, it is unlikely the loss will be covered at anywhere near what it will cost you to reconstruct all that information.

If someone slips and falls on the muddy walkway, trying to visit you the day after the flood for business purposes, your homeowner's policy probably will not cover that, either. And then there is the issue of business slipups.

No matter how good you are at what you do, no one is perfect. You will want to consider coverage so mistakes do not put you out of business.

Before you begin your consulting arrangement or new business, sit down and discuss with your insurance broker all the risk factors you could be facing.

You may not be able to afford to cover every risk right away, so ask for your brokers help to prioritize the risks.

If, for example, customers will not be visiting your office for a while, leave that liability coverage out for now. But if you will visit customers and bring equipment along, cover this risk; you need that equipment to do business, after all, and your business will suffer it if is lost or damaged.

Once you have prioritized and decided upon your initial insurance package, remember to speak with your broker periodically and to add the coverage's that you put off for cash flow reasons, or simply did not need at the time.

To receive a checklist to decide if your small business is ready for a small business policy, contact Martha Marton at Tupling Insurance Brokers Limited. marthamarton @ tuplinginsurance.com