That can include having a home office for your own business or working from home for an employer. If that describes your situation, you should know that your homeowner’s insurance may not cover your business property or the liability associated with running a business.
I recently came across this helpful article, written by friend and fellow insurance professional, Kathy Anders. With over thirty years of experience, Kathy possesses the expertise to cut through the fine print and assist business owners and managers understand the true risks to their firm.
Home insurance is intended to cover your house, garage and personal belongings against unforeseen events (fire, sewer back-up, break-in, vandalism, hail damage, windstorm, just to name a few). It also insures you against the liability of being a homeowner (a guest slips and falls, your dog bites the postman, a tree in your backyard falls onto your neighbor’s house, your drive off the 5th tee hits the guy on the 11th fairway…) Insurance companies are well versed in the variety of losses that come out of insuring family homes and work hard to get the damage repaired or the medical bills covered as quickly as possible.
Most insurers have no problem adding the necessary coverage under your house policy to include your business operation. They will need to know what type of business it is, the value of your stock and office equipment, how often people will be coming to your home, what you anticipate your annual revenue to be and if you have any contractual agreements in place. The additional premium charged for this exposure can be included as a business expense and is therefore tax deductible.
You need to be aware that the insurer has the right to deny claims associated with your home business if they did not know about it, were not given the opportunity to review the additional exposure or collect any chargeable premium. Although unlikely, it has happened in the past.
Because of the huge diversity in business, many variables and risks are considered by an insurer before it agrees to cover the operation. Insurance companies decide what type of risks they want to insure and develop their underwriting guidelines around that appetite. Some want to insure oil refineries but won’t cover the Avon lady, some target crude haulers but aren’t interested in the neighborhood 7-11 store. There is a market for every type of business…some just have higher premiums than others.
To run your business as efficiently and profitably as you can requires strategic partnerships with a lawyer, an accountant as well as an insurance broker. Having these professionals in your corner can ensure your contracts are enforceable and fair, you’re not paying more business tax than you should and you can rest easy knowing that your hard work is protected by the proper insurance coverage. It’s not your job to understand all fine print in an insurance policy; that’s what you have a broker for. Your job is to provide your broker with all the necessary information needed to ensure you are given the best possible coverage at the best possible price.
— Kathy Anders, CRM CAIB
As the commercial lines Managing Partner at First Foundation Insurance, Kathy’s excellent judgment and well-developed insight guide her in providing sound, cost effective coverage with a service level that is second to none.