Insurance

As a home-based business owner, you will want to review the types of insurance that apply to a small-business owner. But you also want to make sure that you are prepared for the unique situations that can occur because you work from home.

Most important, make sure that the issuer of your homeowners' insurance knows your business is operated from home. If you have not planned for potential problems in advance, you might find that there is no coverage for a business-related accident that happens on your premises. Even fire insurance might not be valid if the insurance company was not made aware of your home-based business.

There are many options to adjusting your homeowners' policy to cover your specific business situation. In general, you will want to make sure that business equipment and furnishings are covered, ideally at the cost of replacement. And liability for business-related accidents should be taken into account. If you store inventory somewhere on your premises, that would be another area for discussion with the insurance agent or company representative.

The important point is to talk to your insurance agent or the company representative so that you are managing potential risk.

Are there any special insurance policies that cover both home and home-based business needs?

You can obtain riders to your homeowners' policy that cover many of the contingencies of your home-based business. And some companies have special policies that are designed for the purpose. You can expect business property (including your computer) to be covered under those, as well as other liabilities.

What are the main considerations for insuring my home-based business?

Here are a few topics to make sure you discuss with your insurance agent:

• Replacement cost: If a disaster destroys your business property, you want to be able to replace it without a loss. A replacement cost provision is designed to allow you to replace a used computer or used furniture with a comparable new item.
• Liability: Business-related accidents that happen at your home-or away from your home if you have a business purpose-can be disallowed if you only have traditional homeowners' insurance.