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Assume nothing. When your client falls on your front walk while delivering materials for a project, don't assume that your homeowner's or apartment dweller's insurance policy will automatically pick up his doctor bills. Don't assume that when fire guts your desk and all your customer records go up in floppy disk smoke, you'll receive a penny for your troubles from the aforementioned insurer. Don't assume said company will give you anything more than the value of said floppy disk (about .50), should it decide to cover your business property at all. Don't assume that if a prospect trips over your laptop's power cord while you're visiting her office, she won't sue you for pain and suffering, as well as her chronic back pain, and don't assume that you won't be held liable. Don't assume your auto accident will be covered if you weredelivering a business report when the brakes failed, taking out the trunk of the car in front of you as well as the report. In other words, until you read this, assume you know less than you'd like to about equipment and business-related insurance. Using expert advice, we 'll investigate the ins and outs of buying the best policies for liability, office equipment, data loss, malpractice, disability, and auto insurance. Can You Even Insure Your Business? The devil is in the details-- and the details of most homeowner's policies specifically exclude business property and related losses from their otherwise broad coverage. For a long time, homebased business coverage existed in limbo: too small to entice commercial carriers and too unpredictable to win rubber-stamp approval from the major homeowner's insurance companies. "In general, the industry has not been fond ofhome-based businesses," concedes Dave Tiedgen, an insurance agent in Ann Arbor, Michigan, who specializes in business policies. "We have had trouble finding insurance companies that will accept homebased businesses for commercial liability policies ." The good news is, that's all changing. "Everything we have read and heard says there is one tremendous market where home-based businesses are involved," says Jim Witt, an administrator at Hartford-based Aetna Life and Casualty, which is getting ready to roll out a special package for home-based businesses. Companies such as Continental Insurance in New York have already acted to include home-based businesses under their homeowner's policy umbrella. As might be expected, all this attention brings a lot of noise. Property casualty brokers-some of whom may be less familiar with the particulars of home-based businesses than others--are being handed a slew of new products to sell that gap, overlap, and are sometimes impossible to compare directly. For instance, some homeowner's policies include computer coverage, making a separate rider unnecessary. In other situations, both the homeowner's policy and the separate business rider will exclude computer data. Equipment Insurance Computers, fax machines, and the like fall in a gray area. If you use your business equipment for family fun as well as work, yourhomeowner's insurance may cover it in case of fire, theft. or other destruction...but then that home office isn't really the exclusive place of business you've been telling the IRS about, right? More to the point, most homeowner's policies cap their coverage of such equipment at ,500. And even in today's pricep lunging market that won't cover much in the way of new equipment. Fortunately, a rider (termed an endorsement in industry parlance) that extends your personal property coverage to your business property is one of the easiest and least expensive forms of insurance to obtain. State Farm will sell it to you for .50 a year per worth of coverage, and it'll throw in added hazards. like mechanical breakdowns, spills, and so forth, says company spokesperson Jerry Parsons. That's a year for ,000 worth of computer coverage. Note that these policies---often called EDP (for electronic dataprocessing) policies--do not cover the value of what's on your hard drive if your computer gets wiped out. For that you need a business data policy, which we 'll get to in a minute. As an alternative to a rider, consider a computer-specific insurance policy from Safeware, The Insurance Agency Inc., in Columbus, Ohio ([800] 800-1492). This firm's policies pay up when computers are lost not only to the usual hazards, like fire and theft, but also due to spilled drinks and lightning bolts. The company's basic computer owners insurance covers hardware and purchased software for annual premiums of for up to ,000 worth of coverage; simpler coverage costs less and the deductible is often as low as . A stepped-up policy, called Key coverage, costs more (premiums start at ), and a Gold Key endorsement adds equipment like copiers and phone systems and also pays up to ,000 for lost data that needs to be keyed back in or reprogrammed--which can be a real lifesaver. Generally speaking, insurance experts warn against specialty coverage and instead favor generic business riders, but the Safeware policies have a competitive edge worth looking into. A sister company, The Computer Insurance Agency Inc. ([800] 722-0385), sells a policy aimed at portable computers and personal digital assistants. Called Insurance To Go,this policy replaces those portables should disaster (including earthquakes) strike when you are on the road. Annual premiums are for coverage up to ,000, with a deductible. Contributing editor LINDA STERN also writes articles about insurance and financial matters for Reuters news service. Liability Insurance Protecting equipment shouldn't even be your biggest concern when insuring your home office, notes Tiedgen--it's protecting yourself from a "slip and fall" lawsuit. Your homeowner's insurance typically covers you for accidents to others that occur in your home, and foraccidents (other than automotive) that you may cause when visiting a friend. If you operate a business out of your home, it is crucial that you extend this coverage to include business-related incidents inside and out of your home office, says West Bloomfield, Michigan, fee-only (and home-based) insurance advisor Haig Neville. There are three ways to get liability coverage for your business, and choosing the right way is the chief insurance decision you have to make. Liability rider. The first way is cheapest, simplest, and somewhat less protective. If you run a basic, sit-in-front-of-your- computer-all-day consulting or service business, you can often get an inexpensive endorsement on your homeowner's policy that extends existing liability coverage to business pursuits. This may cost as little as to a year, says Neville, for up to ,000 of coverage. The deductible on such a rider would carry the same deductible already on your homeowner's policy, typically between and . Property casualtyinsurance is unlike health insurance, in that you cannot save on premiums by choosing a bigger deductible because the premiums are relatively low and claims are infrequent. In most of these policies, notes Neville, the deductible is set. There are limitations to a liability rider, however. The ,000 may not be enough if you are sued, and although many insurers will expand personal liability up to million with an inexpensive umbrella policy for about a year, they won't always put that umbrella up over your business pursuits endorsement. And you probably won't be able to obtain related business coverage, such as professional liability or business interruption insurance, as riders to a homeowner's policy. Furthermore, some insurers balk at extending a business pursuits rider to a fulltime bona-fide business. Says State Farm's Parsons, "We will accommodate you if your business is a hobby or of a part- time nature, but if you run a full-fledged company, we would tend to cover that under a commercial policy." Commercial policy. One alternative to the business pursuits endorsement is a standard commercial policy covering business property and liability; this can be less expensive and more encompassing than you might think. "For a year or less, you can get fairly broad coverage with about a million-per-loss, million-per-year limit for liability," says Tiedgen. These policies typically cover business equipment and inventory and are more appropriate than riders for the person who frequently has business visitors and visits business contacts. A comprehensive commercial policy could include other kinds of coverage as well, although this varies from company to company. Forexample, State Farm's commercial policies (which sell for a minimum of a year) include some protection for professional liability like libel and slander but not malpractice. | ||||||||||||||||||||
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