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When Working From Home Can Cost You.

As a small business owner, I must focus on the financial bottom line. Not only do I want to make sure that all my business expenses are paid on time, but this is my family’s only source of income. Like many small business owners in my same position, before I make a purchase, I ask myself, “Do I really need this right now?” When it comes to insurance, the answer to that question is YES!

Originally, my thought was that since the only exposure I had was the office in my home, I basically have no exposure. I assumed that whatever loss I had would be covered by my homeowners insurance.

Then I looked more closely at my homeowners policy.

The standard homeowners policy has an exclusion under liability for any loss because of a business operation. Specifically, the language states: “Bodily injury or property damage arising out of or in connection with a business conducted from an insured location or engaged in by an insured whether or not the business is owned or operated by an insured or employs an insured.”

As an additional source of income, I am a licensed auctioneer in South Carolina and my online auctions are sometimes organized in my home. Even if I have the online auction and the pickup at the consignor’s home, I bring some items back to my home to pack and ship. If a person comes to my premises to pick up an item, drops an item off, or for any other reason related to my business, and they sustain an injury, my homeowners insurance policy is most likely going to exclude it. The UPS delivery person who is delivering (or picking up) my business-related items? If they have an accident while on my property, the claim is most likely going to be excluded.

Can I afford to pay for this myself? Not at all!

That’s where home-based business insurance comes in. You could endorse your homeowners insurance policy to cover the exposure, but why not just have a separate policy that is going to offer broader coverage for your business exposures? A separate policy is more affordable than you think and it’s an important investment to protect the assets you are working hard to grow.

An advantage to working with an independent insurance agency is the agent has access to multiple markets to find the policy that best fits your needs – including premium. It’s important to look at the coverage and carrier first, and premium second, before deciding. The reality for a small business owner is cost is a main factor. When all is said and done, you must make a business decision on whether you are going to self-insure or transfer the risk to an insurance carrier.

These are examples intended to help explain the coverage issue. All claims will be evaluated by the carrier for final determination.

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