Home Businesses Need Specific Insurance
We read with interest the Jan. 3 article on homeowners insurance titled “Insured? Are You Sure?” The article omitted an important coverage problem faced by thousands of people in Los Angeles who operate businesses out of their homes. (There are an estimated 21 million people in the United States who work out of or operate a business from their home.)
Most homeowners policies provide only limited coverage for business activities and some exclude coverage all together. Unfortunately, most people find out about the limitations in their homeowners coverage after a fire, theft or accident occurs. Home business owners frequently store their inventory of product in their home and purchase cars, computers, fax machines, copiers and telephones in the name of their business. Many people may be surprised to learn that most homeowners and renters policies do not cover losses to product inventory, or equipment purchased in the name of a business.
Homeowners also need liability coverage for their business activities and the products they sell. Many homeowners or renters policies do not cover injuries to business visitors. Neighbors and friends are business visitors when they come to your house to pick up orders or attend business opportunity meetings. Nor is there coverage in most homeowners or renters policies for injuries or damage that result from service you provide or products you sell, for instance a customer who purchased a toy claims it injured her child and is suing.
Any homeowner who conducts or is contemplating even a part-time business from home needs to read his or her policies to see what coverage exists for business property and business liability. With a schedule of the property used in the business, and a good description of your business activities, adding coverage to your current homeowners policy may be easy and cost efficient.
In the event that the homeowners policy does not provide the flexibility to adequately cover your home-based business, there are insurance companies who will insure home-based businesses. Your insurance adviser should be able to help you find the appropriate coverage based on your ownership structure, budget and business operation.
Just as you protect your home and valuables, you need to protect your business and its assets. This includes keeping an updated inventory of business property with documentation in a secure place at and if possible away from the home office location. Do not let an accident put you out of business.
PAUL A. ROGERS
Pacific Palisades
(The writer is an insurance broker.)
