Business Owners Policies for the Self-Employed
Who needs a business owner's policy?
Simple, anyone that runs a business from their home should have
one. A comprehensive coverage homeowner's policy will cover
economic losses caused by damage or legal liability but, once a
home business is discovered any economic loss that can be
associated to your business is your problem. Some homeowner's
policies allow business owners to purchase a policy rider that
will cover losses associated with their business. If your
homeowner's policy provider doesn't offer this option you should
consider a separate business owner's policy.
Suppose your home office gets hit by a bolt of lightening (it
happens). The loss from damage to your house, computer and loss
of income amounts to 50,000. If your homeowners insurance
discovers that you were running a business from that room, and
if they sent an adjuster they certainly would, they have the
right to refuse any coverage.
On the other hand if you were wise and purchased a business
owner's policy your entire loss would be covered, even the loss
of income.
Increasingly important is bodily injury liability. If you have
business visitors in your home, a business owner's policy should
cover any liability if they're injured in any part of your home.
Conversely, if you simply had a homeowner's policy and someone
was injured in your home, office or anywhere, they may refuse
coverage for any liability. You don't need to be reminded about
how expensive personal injury liability can be, do you?
What about product liability?
Additional product liability coverage can often be added to a
business owner's policy for an extra fee. This covers you in
case someone is injured using your product. As you are probably
aware, regardless of your involvement in the manufacturing or
design process. The price of this coverage can be extremely
expensive, depending on the products you distribute, but is
definitely worth it. I know you don't need to be reminded about
how expensive product liability can be.
What if I'm not eligible for a business owner's policy?
Different insurance companies have different criteria for
excluding businesses from their policies. If one insurance
company turns you down, ask another. Often, companies that allow
riskier businesses to purchase policies also charge higher
premiums, so it definitely pays to shop around for a policy that
fits your particular business.
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