Are You Covered?

Business Insurance

Recent growth in homebased business has led more and more insurance underwriters not only to offer business-related riders--usually for an additional premium of a few hundred dollars--to existing homeowner's and automobile policies, but also to develop specific products for the small-office/home-office market.

Many business insurance policies with annual premiums of a few hundred dollars now cover on-premises business liability (should, for example, a delivery person slip and fall on your steps), as well as loss of office contents, computer and business equipment and even data reconstruction. A typical plan may protect you for up to $15,000 on office contents, $10,000 on computer-related equipment and $500,000 for on-premises business liability, all for a $275 annual premium.

Business consultants should also consider liability insurance for so-called "errors and omissions." For example, a software consultant hired to analyze a firm's customer list may, through negligence or accident, cause the data to be lost--and become liable for the retrieval or reconstruction costs.

Insurance isn't a good place to cut corners; doing without it could cost you more in the long run.

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This article was originally published in the September 1997 print edition of Entrepreneur with the headline: Are You Covered?.

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