There are about 18 million homebased businesses in the United States. But some 60 percent of them are gambling with the future of their businesses--and most don't even know it. These homebased entrepreneurs don't have enough business insurance coverage, according to the Independent Insurance Agents of America Inc. (IIAA), an Alexandria, Virginia-based trade group.
Many entrepreneurs mistakenly believe they're covered by their homeowners insurance, but most homeowners policies limit loss of business property to $2,500, don't cover losses away from the home, and exclude liability coverage for business-related activity. Consider these risks:
- A graphic artist can easily have $20,000 in computer equipment and software in the home.
- Sales representatives often take a laptop and cell phone on the road to meet with customers.
- A client could slip and fall during an appointment at a homebased bookkeeping service.
- A homebased manufacturer could be held liable if his or her product injured someone.
When Toni Korby started her home furnishings design firm in her Centreville, Virginia, home, she didn't think she needed extra insurance because she had little equipment, no inventory and no customers visiting her home. But worries about liability caused Korby to rethink her needs.
Jan Norman is a freelance writer who specializes in small-business issues. She can be reached at firstname.lastname@example.org