Home-Based Companies Need Business Coverage

Many people start home-based businesses to earn extra income, and these businesses can come in all types, ranging from beauty salons to bookkeepers and everything in between.

During the start-up phase, there are many factors to consider: Will you provide a product or service? If you’re providing a product, will you make it at home? How will you market yourself? Where will you look for funding, and what financing programs are available?

Carving out your own niche is the fun part of starting a business, but several other areas need decisions as well: Will you operate as a sole proprietor or form a corporation? What accounting rules will you need to know? What relevant government agencies should you be aware of? And what kind of insurance will you need to protect your new venture?

Whatever your business, if you operate out of your home, you will need liability insurance for the products you make as well as for the customers you do business with.

Be aware that your homeowners’ insurance policy does not provide this coverage. Insurance companies want you to insure a business on a business policy.

In addition to liability concerns, you may have bought materials and equipment that are specific to your business rather than part of your household belongings. These also need to be covered by a business insurance policy.

If you use your own car to make deliveries or go to appointments, your personal auto policy will not cover this and you will need business auto coverage.

Fortunately, there is an inexpensive type of policy that can give you an adequate liability limit and coverage for your business property and auto. It’s called a business owners policy, and it’s offered by nearly every major insurance carrier.

Costs can run between $500 and $1,000 per year, depending on what you need to insure.

Health Savings Accounts Can Save You Money

Health savings accounts (HSAs) can help individuals save money by paying for a number of health care expenses that are not covered under their current health insurance policy. These plans may also help in providing funds for individuals with a limited amount of health insurance coverage, especially on services that may be related to uncovered preexisting conditions.

As HSAs are set up in conjunction with high-deductible health insurance policies, someone considering purchasing one should first determine if the plan’s deductible will be manageable should a medical need arise.

However, in many cases – primarily for those who are young and in good health – a high deductible health insurance policy does make sense; typically the higher the deductible, the lower the premium will be for the policy.

In addition to building up a health-related savings fund, owners of an HSA may even obtain tax advantages, as they may be able to deduct the deposits that go into their HSA account when preparing their annual tax returns.

When withdrawn for qualifying health-care related costs, the money in an HSA often can come out tax-free. In addition, funds within the HSA account will typically grow on a tax-deferred basis, allowing the money to compound faster.

If this sounds like something that could be of benefit, before you open an account you should discuss your options with your advisor. Be sure to compare different plans and deductibles for the combination that will work best for you.

Between Jobs? Fill the Health Insurance Gap

For many people who are between jobs, it is about more than just trying to manage without a regular paycheck; it also can mean living without that all-important health insurance coverage.

While most individuals may be eligible to continue their coverage under their former employer’s health insurance plan through the Consolidated Omnibus Budget Reconciliation Act (COBRA), this can be an expensive option, especially if the coverage is not just for the unemployed individual but also for a spouse and/or children.

Some people who are between jobs may be willing to take a chance and go without coverage until they have a new position and can participate in their new employer’s plan.

However, this could be very risky, because an accident or illness could occur during this coverage gap.

The Temporary Health Insurance Coverage Solution

One of the best ways to avoid the financial risk of a costly medical problem that develops between jobs is to purchase a temporary – or short-term – health insurance policy. If the individual will probably require coverage for only a year or less, temporary health insurance could be a viable alternative.

Temporary plans can offer comprehensive benefits, often at a very affordable price, even when compared to a stand-alone plan or COBRA. In addition, if the applicant is in good overall health, a temporary health insurance policy can be approved quickly, often in as little as two days after applying.

Many top-rated insurance companies offer temporary health insurance coverage, making it easy to compare different benefit options as well as premium amounts.

With today’s cost of medical care – even for minor issues – it’s wise to have continuous health insurance coverage. Temporary policies can fill the bill and represent a great way to help bridge the gap between a former employer’s benefits and eligibility for a new group insurance policy.

Thinking About Life Insurance? Read This First

Life insurance may seem complicated, but basically all policies fall into one of two categories. It’s fairly easy to determine which category and how much coverage you’ll need.

Applying also isn’t difficult. Apply for insurance when you’re young and healthy. And tell the truth when you apply for coverage.

To simplify matters further, we’ve compiled these tips for individuals who are in the market for life insurance (or just want to know if their existing policies are sufficient):

  • There are two types of policies. Pure term policies consist of insurance only, meaning you pay a premium and the policy pays out a certain amount when you die. Whole life policies combine term policies with an investment product. They also build cash value.
  • Consider your options. Whole life insurance may be just right for some people; you can keep whole life policies throughout your life and also build up tax-free cash, which then can be borrowed. However, these policies usually cost more. Pure term policies are for those who prefer to keep their investing and insurance separate.
  • Always buy enough life insurance to meet your needs. Life insurance is no place to skimp. Because whole life insurance is often more expensive than term life insurance, many people who buy whole life often buy too little, leaving themselves underinsured.
  • Be sure the term of the policy meets your needs. Life insurance is all about protecting the people you leave behind. Don’t buy it unless you have dependents, and ensure the policy will last as long as your dependents do.

If you need assistance researching your life-insurance options and applying for the appropriate policy, your advisor can help. He or she knows your financial circumstances and goals and can help you select the best policy for you.

Vigilance Pays Off in Preventing Insurance Fraud

As a business owner, you may not think that insurance fraud affects your business.

While you may not experience fraud directly, you certainly experience it indirectly through increased insurance premiums. As the Federal Bureau of Investigations says on its website: “The total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means insurance fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.”

Who is committing $40 billion in fraud? It’s true: organized crime rings do commit fraud. However, it’s the high number of ordinary people who commit fraud that may be the most telling. Particularly during tough economic times, many individuals look for ways to raise money by defrauding their insurance companies.

Some of the most common scenarios target auto insurance and worker’s compensation insurance. In these scams, people generally claim larger benefits than they are due. In car accidents, for example, requests for repairs or reimbursements are padded to cover deductibles. Similarly, in workers compensation claims, injuries are exaggerated, so the insured workers are off the job for a longer period of time and collect more than is warranted for the type of on-the-job accident they suffered.

Your best defense is a great offense. Know your executive team and your staff personally. Train them well, and put into place a good system of controls and cross-checks. You’ll feel a lot more confident that you have reduced your risk of experiencing a fraudulent claim.

Protect Against Larceny With Crime Coverage

Businesses handling money need to consider crime coverage as part of their commercial insurance portfolio. This provides protection in eight key areas:

Employee Theft covers any kind of theft by an employee and isn’t limited to theft of cash.

Forgery and Alteration applies to third parties, including contractors who are in your workplace for cleaning, construction or repairs and who steal your checks. Coverage is provided for checks drawn on your account or the account of any party who acts as your agent. Checks include drafts, promissory notes, and orders or directions to pay money.

Inside the Premises – Theft of Money and Securities includes money (defined as currency, coin or bank notes in current use with a face value) as well as traveler’s checks, register checks and money orders held for sale. Cashier’s checks are not considered money.

Securities are defined as negotiable and non-negotiable instruments that represent money or property, including commodities such as grain and tokens and stamps (even stamps in a postage meter). Securities can also be evidence of debt related to credit or charge cards, but only if the evidence of debt is against a card not issued to the insured.

“Inside the premises” encompasses your place of business and your banking institutions. If your bookkeeper is taking checks to the bank and they’re stolen, you are covered.

You are also covered for an attempted or actual theft from locked safes, vaults, cash registers, cash boxes and cash drawers inside the premises as well as for the disappearance or destruction of money or securities.

Inside the Premises – Robbery or Safe Burglary of Other Property covers you against robbery (the unlawful taking of covered property from someone having custody of it, where actual bodily harm or threat of bodily harm is involved). It can also be an obviously unlawful act witnessed by the person having custody of the covered property. Safe burglary requires evidence of forcible entry into or the removal of the entire safe or vault from the premises.

Outside the Premises is literally anywhere outside your business. Coverage is provided for theft, disappearance and destruction while outside the premises and in the custody of a messenger or armored car company. Coverage includes theft, robbery or other instances of accidental loss.

Computer Fraud provides world-wide coverage of money, securities and other property fraudulently transferred by computer from the insured premises or banking premises to a location other than the insured premises or the banking premises. It does not include transfer to a messenger.

Funds Transfer Fraud provides coverage for loss of funds resulting directly from a fraudulent instruction directing a financial institution to transfer, pay or deliver funds from the insured’s transfer account.

Money Orders and Counterfeit Money provides coverage for counterfeit money accepted in good faith in exchange for purchases. It also covers money orders accepted by the named insured in good faith but not accepted when presented by the named insured for payment. The coverage territory is limited to the U.S., its territories and possessions, and Canada.


Protect Your Baby With Classic Car Insurance

Summer is the perfect time to take your baby out for a ride. We’re not talking about your four-month-old baby; we’re talking about your other baby – your classic car. In the season of warm breezes, nothing beats the feeling of burning up the open road in your classic.

Classic cars come in all shapes and sizes, but they have one thing in common: the love and passion of their owners.

So it’s important that you have the right insurance protection for your car. Classic car (or collector car) insurance offers specialized coverage not available in standard auto policies, including:

  • Agreed value. Car insurance is typically based on actual cash value, which means you get the depreciated value of your vehicle in a loss. Collector vehicle insurance, however, provides agreed value, which means that you and the insurance company agree on the value you would need to replace your classic. If you are offered this option, take it.
  • Mileage plans that take into consideration the lower mileage on collector vehicles.
  • Coverage for modifications to the car.
  • Coverage for spare parts. This is usually a fixed amount, but it can come in handy if you need to make a last-minute repair.

In addition to providing the all-important coverage, these insurance carriers are very knowledgeable and can “speak your language” when it comes to insuring your hot rod, your exotic car, your classic motorcycle or your muscle car.

Now get out and burn up the road!