Insuring Your Home-Based Business
A friend of mine sells jewelry through a multilevel marketing program. She doesn't carry any insurance for her business because she says that she can't afford it - she doesn't make enough money on the business. However, the cost of insurance shouldn't be the determining factor for her; the cost of the possible loss should be the determining factor.
When I pointed out to her that she could be doing a jewelry party at someone's house, and 
a small child could swallow or choke on one of the pieces of jewelry, she could then have a liability claim against her. There's also the possibility that she could have jewelry delivered to her door, and if the UPS man is delivering a package to her home that is addressed to the business, then the claim may not be covered.
She owns quite a bit of jewelry that belongs to her business and this jewelry also would not be covered for theft or for fire damage in the event her home burns down.
There are a few different ways she could insure her home-based business.
The least expensive way, but also the least effective, is to add an endorsement to her homeowners policy, which extends the liability to business pursuits.
Some companies also offer a home business endorsement on the homeowners policy that extends both liability and property coverage. However, it does not provide any loss of business income in the event that her home burns down and all property is lost, therefore losing the ability to host jewelry parties. This could be disastrous for her at a busy time of year like Christmas or Valentines Day.
The third and most comprehensive way to cover her home-based business is with a Business Owners Policy. These are policies designed especially for small businesses. They are generally higher priced than the other options, but accordingly they also provide broader coverage.
If you have a home business, call Clark-Mortenson today at 877-352-2121, or e-mail your agent at beready@clark-mortenson.com, to be sure you know what is covered under your current policy.
