A typical homeowners policy only provides $2,500 of coverage for business equipment, which is most cases is not enough to cover all of your business property. You may also need coverage for liability and lost income. There are three basic choices to insure your home-based business depending on the insurance company and the type of business you have.
- Homeowners Policy Endorsement
You may be able to double your standard coverage for your business equipment such as computers by adding a simple endorsement to your preexisting homeowners policy, you can raise the policy limits from $2,500 to $5,000 for as little as $25. Some insurance companies allow you to increase your coverage up to $10,000 in increments of $2,500. There is also the option to buy a homeowners liability endorsement to cover in the event a client or delivery personnel gets injured on your premises. These policies are usually only available to businesses that have few business related visitors.
- In-Home Business Policy/Program
This provides more comprehensive coverage for liability and business equipment compared to a homeowners policy endorsement. These policies vary significantly depending on the insurer. These policies most often reimburse you for the loss of important papers and records, accounts receivable and off-site business property in addition to the protection for your business property. Some will pay for the loss of income in the event of a fire or other disaster where your home can’t be used for a period of time. Some in-home policies allow up to three full-time employees as well.
- Business Owners Policy (BOP)
These have been created specifically for small to medium sized companies and could be the perfect solution for you if your home-based business operates in more than one location. A business owners policy like the in-home business policy covers business equipment and property, extra expense and liability, and loss of income, but on a much broader scale than the in-home business policy. If you do have employees it does not include workers compensation, health or disability insurance so you would need separate policies to cover those aspects if necessary.
How to prepare your business for extreme winter weather.
With winter right around the corner many businesses are unprepared when normal winter weather turns to extreme winter weather. Many events can occur that could result in devastating losses. During severe cold water or sprinkler pipes can freeze and burst, thus affecting paperwork, records, computers, and machinery. A broken or open window in an un-insulated area can let in enough cold to set off a chain of events, freezing nearby piping and major setbacks. There are some things that you can do to prepare for the winter ahead to avoid these costly problems.
- Update your Emergency Response Program for winter emergencies to include proper procedures for severe cold conditions. Also have someone monitor the weather forecast to plan ahead for these conditions, and procedures for loss of heat or electricity.
- Determine which company processes depend on building heat or electricity for safety and need special attention.
- Identify processes, equipment, and piping that contain or use water or other liquid that is susceptible to freezing, those might need to be drained in the event of loss of heat or electricity.
- Locate building areas that are more difficult to heat, install an ordinary thermometer to monitor temperature during times of severe cold.
- Service the heating system before the winter season begins to insure that everything is working properly.
- Inspect the exterior of your buildings to minimize unnecessary openings, fix windows and doors so that they close tightly. Insulate and weather strip as needed.
Tips for Property Owners:
Property owners can often overlook the potential for losses to or on their property, but it is something that needs to be considered. When a property owner understands the risks, they can be managed better. Some scenarios to consider include:
- Fire- A grease fire starts in a restaurant in your building and spreads damaging tenant’s contents.
- Third-party injury or illness- A patron slips and falls in the parking lot, spraining her ankle.
- Vacancy- Your unoccupied building is vandalized, and there is theft of stored equipment.
- Natural perils- A tornado sweeps through town, damaging your building and your tenant’s goods.
How can you reduce your risk?
A well designed lease agreement can assist in transferring responsibility for payment due to bodily injury of property damage to the legally responsible party. When evaluating your current lease or other formal contract, check to ensure your agreement includes these:
- Drafted by knowledgeable counsel and reviewed by your attorney signed by all tenants
- Authorizes you to develop, change and enforce rules and regulations for the premises
- Clearly defines which areas you control and which tenants controls
- Contains provisions regarding use of hazardous substances, dispensing of liquor and other activities that increase the risk of loss
- Defines the maintenance obligations of all parties while specifying the scope of the operations and the steps you will take if the tenant defaults on these obligations
- Some property owners require their tenants to hold a Renters Insurance policy
While it is your duty as the property owner to live up to your obligations, it is also smart to make sure your tenants take responsibility for their actions and premises upkeep. By having a clear cut, easy to understand legal binding lease or contract, everyone understands what is expected of them and you at the property you own and who is responsible in the event of a loss.
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