Autumn Years Fall 2023

FINANCIAL PLANNING

Home Business Insurance Basics By Dan Gallagher

Technology and social trends (along with the pandemic) have driven a wave of telecommuting. Many work at home at least on some days while some may work from home all the time. For that reason, more and more homes con tain a designated office area—and with increasing frequency that area is a room. I f the work you do is not for your own business, you can often amend, or en dorse, your homeowner, condominium owner or renter’s policy to extend liability protection for incidental office exposures. Modifying your homeowner policy is also an easy and inexpensive way to in crease the limits for coverage of business property. A standard limitation is usually $2,500 for loss to business property on your residence premises but only $250 for business property away from your residence. Many insurers will, in exchange for some small additional premium, allow your homeowner policy to cover $5,000 or $10,000 of business property. And for a telecommuter, that is often the best solution. Approximately 60 percent of all small businesses are home based, and this includes real estate sales and sales and distribution of products as a part time business. If your home based business is not your main source of income, you still need to consider additional risks that may not be covered, even under an amended homeowner policy. Here are a few: • Business-related personal property (equipment and furniture) in excess of

one. Life insurance is also used as a vehicle for perpetuating a business in the event of the death of an owner. • Health plan: The same thing applies here as to life insurance. If you do not have an employer supplying or subsidizing this important protection for you, and you are not yet eligible for Medicare, you will need to get a plan on your own. • Workers’ compensation: Most states require employers, even home based ones, to purchase workers’ compensa tion if they have employees. Workers’ compensation insurance offers a sched ule of benefits for employees unable to work because of a job or workplace related injury or illness. While the pandemic that drove many employees into remote working has abated and many employers are now asking, or in some cases, demanding that their employees return to the office, the work-from-home model will continue to be an option for many people. Also, small business owners now see the cost of maintaining office space makes little sense when productivity of remote work ers has not suffered and may actually have improved. So knowing the basics of home business insurance can help mini mize potential risks and the stress that comes with them.

the homeowner policy limita tion—both on and off the premises • Inventory you store or have on hand • Business property of others while in your care or under your responsibility • Accounts receivable • Valuable papers and records • Electronic data coverage • You may need liability to extend to personal injury, products and completed operations, incidental contractual liabil ity and general commercial liability. • If you are driving people around for business reasons, transporting supplies or products or visiting customers your personal auto policy may not provide coverage. Most of these additional risks and more can be picked up through a Home Based Business policy. These policies usu ally allow for up to three employees and will allow more adequate limits of protec tion for liability and property. If your home business is your primary source of income, you will want cover age for business interruption and extra expense. Fortunately, this protection is usually included in a Home Based Business policy. There are a few other kinds of insurance you should be thinking about as well. • Disability insurance: If you become disabled and are unable to work and generate income, this insurance will help to keep you “paid” during that period. It will not cover ongoing business expenses, however. • Life insurance: Many employers provide at least some life insurance protection to their employees. Since you are the employer, you are on your own on this

Dan Gallagher is the owner of Gallagher and Associates Insurance Agency, Inc., in Hawthorne, NJ. He helps clients select auto and home

insurance plans that meet their personal insurance needs and helps business owners choose commercial coverage for business property and liability.

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AUTUMN YEARS I FALL 2023