Operating a small business from home can free entrepreneurs from the costs of leasing space and commuting. But too many of them may shortchange themselves when it comes to buying insurance.

A recent survey commissioned by the Independent Insurance Agents & Brokers of America found that nearly 60 percent of the nation’s 11 million home-based businesses do not have insurance coverage. Of those entrepreneurs, nearly 40 percent thought they were already protected by some other type of coverage, while almost 30 percent said their businesses were too small to insure.

L-A SCORE counselor Ralph Tuttle warns: “Home-based businesses are at risk for significant financial losses associated with theft, accidental damage, natural disasters, vehicle accidents and liability if an employee suffers an injury while on the job or a business guest is hurt while visiting the home-based business.” He adds, “Homeowners insurance normally does not provide protection in these situations. Investing in protection can provide security and peace of mind as a business grows and produces more income.”

To protect home-based businesses, Tuttle offers the following tips:

• Check your homeowners policy. Homeowners insurance was never meant to cover business exposures. Coverage for certain business items is limited, and provides no liability insurance for home-based businesses. Also, a homeowners policy offers no business interruption coverage in the event that a loss causes a home-based business to cease operations. However, a home-based business owner may be able to obtain an endorsement to add these coverages to an existing homeowners policy.

• Check business insurance policy options. There are several options for home-based businesses, including incidental business endorsement, a business owner’s package policy, or an in-home business owner’s policy. While levels of coverage and premiums depend on the risk associated with each business, a comprehensive commercial policy can be very affordable.

• Protect yourself. If a home-based business is a full-time occupation, business owners must consider protections such as life, health and disability insurance, as well as possibly workers compensation. Refer to your insurance agent to identify risk areas and provide guidance to protect yourself and your business.

For more advice about starting or improving your small business, contact SCORE, a
nonprofit organization of more than 10,500 volunteer business
counselors who provide free, confidential counseling and training
workshops to small-business owners. In the Lewiston-Auburn area, call
L-A SCORE at 782-3708 for additional information and an appointment; in
Rumford-Mexico call 364-3123; in Oxford Hills call 743-0499. Or contact
SCORE at www.SCOREMaine.org.