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Home-based business? You need insurance for that, too

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A survey fielded by a national alliance of business owners and their employees who offer insurance and financial services products has indicated almost 60 percent of home-based businesses do not have proper business insurance coverage.

According to Pennsylvania Insurance Commissioner Jessica Altman, home-based businesses in the Keystone State are no exception.

“Many Pennsylvanians run businesses out of their homes, but many may not have the insurance coverage they need to protect their investment and their income,” Altman said in a news release issued by the Pennsylvania Insurance Department.

As a result, Altman has recommended home-based business owners get down to the business of determining they have the right type and amount of insurance coverage.

She also has recommended they learn how to file claims for storm damage prior to an insurable event.

LOST INCOME, STOLEN DATA

Altman advised owners of home-based businesses to not rely on their homeowner coverage to protect their businesses, as many homeowners’ policies cover only up to $2,500 for damages to business property.

Homeowner policies also may not provide coverage in the event of the following risks:

< A customer or employee is injured while on-site at the home-based business.

< Damage to the home results in lost income.

< A client’s data are stolen from the home-based business’ information technology system.

EQUIPMENT, INVENTORY

Altman also recommended home-based business owners should consider the following issues when selecting coverage to protect their businesses:

< Is business equipment or inventory stored at the home?

< Are business items delivered to the home?

< Are vehicles driven for the business?

“I encourage home-based business owners to inventory equipment, furniture and everything used to operate the business, then meet with an insurance professional to make an informed decision on what protection is needed,” Altman.

FLOOD-PRONE STATE

The Insurance Department also offered an advisory for business owners following storm damage.

This advisory is particularly relevant to Pennsylvania-based businesses, since the state is considered to be one of the most flood-prone in the nation, with about 83,000 miles of river and streams and nearly 2,400 local governments enrolled in the National Flood Insurance Program.

“Business owners should contact their insurer as soon as possible after their property is damaged by a storm, follow instructions from the insurer and keep a record of people to whom they spoke,” Altman said.

“Also, keep all receipts and provide the insurer all information needed to avoid delaying payment of a claim.”

DOCUMENT DAMAGE, LOSSES

The Pennsylvania Insurance Department also listed the following advice for business owners following a loss:

< Take photographs or video of damage prior to cleanup or repairs.

< Keep track of damage to the business property, as well as damage to property owned by others that is in the business’ care, custody or control.

< Keep a record of lost business income and extra expenses.

While business owners should promptly make repairs to prevent further damage to buildings and property, Altman recommended delaying permanent repairs until the insurance company can inspect the damage and approve repairs.

TRUSTWORTHY BROKER

As a final note, home-based business owners should choose a broker they can trust who takes time to learn about all aspects of their business risk before bringing this risk to market.

This broker will help to choose the right types and amounts of insurance coverage appropriate to each home-based business, and work through the claims process in the event of a loss.

Based in Warrington, Tom Kueny is a partner concentrating on the Lehigh Valley with KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm serving clients worldwide. He can be reached at tkueny@kmrdpartners.com.

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