Ruth Susswein: Hi, I am Ruth Susswein from consumer action. Today I'll discuss home based business insurance and what to know when considering a policy. Insurance is an essential part of protecting a home-based business. Insurance coverage is not about how much money you make, but about how much money you can afford to lose. Problem is many entrepreneurs who work from home mistakenly believe that their homeowners or renters policy includes business property and liability protection. Whether you're selling homemade crafts, doing freelance consulting or taking homegrown veggies to farmers markets, its vital to know your insurance needs.
Micro-businesses, very small-scale operations are especially vulnerable to liability, since often they operate on a shoestring budget. If you're sued and become liable for damages insurance can protect important assets such as your home and family savings, property and liability add on policies called Riders can be more affordable but to qualify you might need to have a minimum amount of revenue each year. Adding a Rider or endorsement to your homeowners or renters policy might work for a one to three person home-based business.
Each state sets its own rules for home-based businesses and coverage requirements vary widely from state to state. The rules established by State Insurance Commissions are designed to protect consumers. If you have employees even one it's likely you'll be required to have Workers Compensation Insurance. Consider these questions before you buy insurance. Will clients come to my home? Will I receive deliveries at my home? What coverage do I need if I visit clients at their homes? Will one policy cover me at my home and my client's homes? Does this coverage protect my customers, equipment, inventory and records? The time you take to understand and assess your insurance need is well worth the effort knowing you are well protected gives you the confidence to make your business thrive.