Address Home Business Insurance Needs Before You Start Company

Home business insurance is an issue that you need to address before you start a business--even the most modest of home businesses. Why? Because, depending on what you are doing in your house, it could negate your homeowners insurance should problems develop and cause you unwanted financial exposure.

Your first step then, when considering a home-based business, is to check with your municipality to ensure that it is legal to operate a business out of your house. This is crucial. If it is not legal, find another location that is legal. If you make a claim that somehow relates to a business that was run illegally out of your home, chances of collecting any money are negligible and you will probably have your policy canceled for good measure. So check on that. This is doubly true if you will have employees working in your house or if you will have clients visiting. This even includes a cleaning person who may clean your office. A case of trip and fall and an insurance claim denial could cost you your business and your property!

Get with your insurance agent to discuss the whole issue of home business insurance. If your insurance agent is not well-versed in home business insurance, find an independent agent who is. Check with your lawyer or accountant, or a smart business person that you know for names of good agents.

Be upfront and detail for the agent what you will be doing out of your house, including employees and client visits. Always leave a paper trail with these kinds of issues/discussions. That is, follow up a meeting with a memo of what was discussed about your home business insurance options.

With home business insurance, you need to look at a minimum of four areas when you sit down with your agent:

  • Property insurance
  • Liability insurance
  • Loss of income
  • Records

Click on business insurance for a broader discussion of types of insurance that a business needs. Also look at Workers' Compensation.

Another issue you need to look at right away is flood insurance. Many people assume that their homeowners policies cover this type of damage but today, there is little or no conventional coverage for damages due to floods and many insurance companies have a very liberal policy as to what they consider floods—that is, virtually any water damage. You may need to buy a special flood insurance policy. Go to a government website FloodSmart.gov to learn more about flood insurance.

One of our editors went to the above mentioned website and was invited at the site to input his address, Zip Code, etc. to determine if he were vulnerable to floods at his location. It was determined that he was adjacent to a flood-prone area and that his property was of High Risk. The website also offered to estimate flood insurance costs on his property. They were as follows:

  • Contents only: $145-$1,148
  • Building only: $403-$1,701
  • Building and contents: $509-$2,766

Small Business Health Insurance

Small business health insurance is a serious issue to deal with. If your significant other has a job and health insurance, you are lucky, if not, you need to shop for it as soon as possible. Even if all of the rancor and debate in Washington settles down and a health care bill is passed, chances are that it will take years to implement. Meanwhile, you need coverage.

Much of the insurance industry is regulated at the state level, including small business health insurance plans. The place to begin is with your insurance broker. He or she should have policies to sell you but ask if it is possible to get small business association health insurance. That is, some states will allow members of an association to join together and purchase health insurance. Other states will not. Therefore, each state has its own way of doing things.

Health insurance for small business owners is a hassle. You will quickly discover New Jersey (NJ) small business health insurance, Iowa (IA) business health insurance, California small business health insurance, New Hampshire (NH) small business health insurance, small business health insurance in Pennsylvania, Arizona small business health insurance, michigan small business health insurance, Maryland small business health insurance, Illinois small business health insurance, and small business health insurance in Florida, to mention just a few states, have little or nothing in common with one another. Each are separate animals. If you want cheap small business health insurance, go with a small business association for the best price. There are some groups around whose sole purpose seems to be to furnish health insurance and not at a low price. Look for insurance within your own industry for help. Another possible path is to try to form a small group with several people. You won't get a great price but it should be less expensive than individual health insurance. Naturally, be careful and understand your deductibles, how and why policies can get canceled, yearly maximums and lifetime maximums. This business is totally structured in favor of the insurance companies at this point and if is a difficult hurdle for the small business person.

Links to Insurance Articles in This Section

Workers Compensation Insurance

Home Business Insurance

Comprehensive General Liability (CGL)

Comprehensive General Liability (CGL)

Professional Liability Insurance

Product Liability Insurance

Product Liability Insurance for Small Business

Jump from Home Business Insurance to Business Insurance