For many Americans, running a home business is a major part of achieving individual dreams. More than 50 percent of small business owners in the country have businesses that are based from home. Nearly 60 percent of businesses that have been in existence for more than three years are operated from home. However, the most promising home business dreams are difficult to achieve without good insurance planning. The National Association of Insurance Commissioners wants home business owners to learn more about the Insure U campaign and the Insure U for Small Business site. These resources help business owners learn about obtaining adequate insurance to protect their longevity and assets.
A considerable amount of entrepreneurs wrongly think that their business assets are covered under their personal insurance policies. However, owners do not learn their mistakes until major incidents place their personal finances and their businesses at risk. What business owners do not know about insurance often winds up hurting them before too long. There are costly and unexpected impacts on all personal insurance plans when the lines between home and work are too close. The NAIC formed “Get Ready” for home business owners to stay focused and be more prepared. There are several valuable tools and tips included in the resource kit.
The following paragraphs outline some personal insurance implications related to a home business.
Home
Both home insurance policies and renters’ insurance policies are seldom sufficient for the needs of a business. A business owner should consider a business policy or at least a general liability insurance policy. Business property insurance and interruption insurance are also important.
Auto
People who leased or purchased a vehicle almost exclusively for business purposes should list the name of the business as the principal insured. It is helpful to raise coverage amounts to protect any items that are considered attachments.
Health
There are several sources available for buying PPOs, HMOs, EPOs and various other health plans using group rates. With the Affordable Care Act in place, business owners and people who are self-employed can buy coverage through new marketplaces to enjoy various tax credits.
Life
For home businesses that are set up as partnerships, it is best to consider a key person life insurance policy for each partner. The beneficiary for each of the two policies should be the other partner. In the event that one partner dies suddenly, the surviving partner can use the funds to purchase heirs’ interests, pay off debts and keep up regular business operations.
There are many other considerations for small business owners who are shopping for insurance or wanting to add to their existing policies. To learn more about business insurance options and which choices are best for individual business needs, discuss concerns with an agent.
