Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 15, 1995 TAG: 9501160013
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
The Insurance Information Institute, a Washington-based trade group, estimates that about 12 million people in the United States conduct businesses in their own homes.
The institute naturally is interested in helping such people safeguard their businesses by obtaining the requisite property and liability insurance. It said a few companies are newly introducing policicies designed specifically for home businesses.
The catch, according to the institute, is that many owners of home business are underinsured because they mistakenly think they are covered under their homeowner's policies.
But there is only limited coverage under the homeowner's policy for business equipment. In most cases, the institute said, the business owner is covered up to $2,500 for business equipment in the home and only $250 away from the premises.
The homeowner's policy does not provide coverage for business-related liability such as an injury to a customer or supplier that occurs on home property, the institute warned. Nor will the policy replace lost income if the business is unable to operate because of damage to the home.
The institute said that home entrepreneurs have several options.
One is to add endorsements to the existing homeowner's policy. A home business owner can extend the coverage for business equipment by getting an endorsement for a higher limit than what is stated in the policy.
State Farm is one example of a company that will write a rider to a homeowner's policy. For $14 to $30 a year, the rider will protect up to $10,000 of business property in the home and $1,000 away from the premises. But it concentrates on home businesses that are primarily hobbies; its top coverage for a computer is only $1,000.
Some insurers also offer endorsements that include both property and liability insurance for businesses that are considered ``incidental.'' Each company defines that term differently, but some insurers consider a business incidental if it grosses less than $5,000 a year.
Another choice is to buy a business-owner's package policy, which provides both property and liability coverage.
Such policies generally cover business equipment and property; loss of business income or extra expenses resulting from a peril such as a fire; and liability coverage for bodily injury and property damage.
Finally, some insurers now offer a policy that links homeowner's and business coverage together, a mini-business policy designed specifically for a home business.
These policies extend the amount of personal property and liability coverage in the homeowner's policy to a business endeavor. And they provide coverage for loss of business income caused by an insured peril. In other words, they cut the possibilities of gaps and duplications in coverage.
The institute said two companies offer policies that range from $150 to $225 a year for ``white-collar-at-home types'' who need coverage for their fax, computer, phone and the like.
One is In-Home Business Policy written by RLI Insurance of Peoria, Ill. It covers up to $5,000 worth of equipment in the home office; $1,000 worth of equipment carried outside the office; and business interruption because of fire, tornado or theft. Coverage can be raised to $50,000 at a cost of $3.30 for every additional $100.
Continental Insurance of New York City has a ``HomeWork'' policy. For $175 a year, it covers all business property at home; up to $10,000 worth of business property lost off premises, business interruption, advertising liability, computer data loss and mishaps in the office.
Aetna and CNA also offer policies.
The carriers exclude some home professions.
The institute advises home business owners to talk to a knowledgeable insurance broker or agent. A home business owner can get the names of business insurance professionals by contacting their home/auto agent, talking to owners of similar business or asking the trade associations that represent their line of endeavor for advice.
But callers may find that such policies are still rare on the market in Roanoke.
Bill Stack of Richardson, Johnston, Wynn Inc. said such policies are relatively new and he has seen them discussed in trade publications, but he has seen no specific product in the market. Nor has he experienced much demand because most people apparently believe that their homeowner's policy offers protection.
Leo McMann of Insurance Associates said he has not yet seen such a product in Roanoke. He too has seen no demand from customers.
The discussion with the insurance professional should cover car insurance for business activities, health insurance, workers compensation and umbrella liability policies. Don't forget to ask about available discounts.
The institute offers single copies of a brochure, "Insuring Your Home Business," and also answers general insurance questions. Call the National Insurance Consumer Helpline at (800)942-4242.
by CNB