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Startup Rules
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Article 4: Insure Your Business
You know you need insurance to protect your home business. What you may not realize is that many homeowners’ policies exempt equipment and supplies used exclusively in home businesses.
Not long ago it was difficult to find insurance companies selling coverage for home-based businesses. That’s changing. Not only are there companies catering particularly to home-based businesses, but also some mainline insurance companies now offer additional coverage for businesses in the home.
Consult with your insurance agent about whether your homeowner’s policy or a separate policy can cover your office equipment, such as computers, printers and inventory. But first determine how much coverage protection you require.
If you have many people visiting your home on business, you have more reason to protect your business from slips and falls claims that can result in medical bills, defense attorney fees and court judgments.
Also, consider whether replacement costs for equipment damaged or stolen should pay for the full value or a percentage. Prices continue to decline for the equipment you use, so replacements may not cost as much.
Another consideration is whether to be reimbursed for loss of income or relocation expenses in the event of catastrophes. Do you need coverage to replace valuable documents? And consider whether it’s worth paying for reimbursement of lost income if your accounts receivable records are destroyed.
Not every home business needs coverage in each of these areas. Those that do will vary in how much coverage they require.
Start by imagining losing everything. Work backwards to determine what must be replaced, what you can do without for a while and what would be frivolous to insure.
After setting priorities, consult an insurance agent to see how much it will cost. Until you know what’s irreplaceable, it doesn’t make sense to start talking about coverage limits and premiums.
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