Home Businesses Need Commercial Policies, Too

It’s the new American dream-working from home. However, home-based businesses face risks, too. They need commercial insurance coverage like any other business, as homeowners or auto insurance won’t cover common home-based business risks.

Here are just a few risks:

Did you hear the one about the delivery person?

Any injury that occurs in the course of business is not covered by homeowners insurance. For example, you can be found liable if delivery people are injured while making business-related deliveries. Or if a customer trips walking up the sidewalk to your home-based computer repair shop and breaks a hip, your homeowners insurance won’t cover injury expenses.

Business property

If that customer’s computer breaks into pieces during the fall and is destroyed, you’re responsible for her injuries and for the damaged property. And if a tree crushes the customer’s car parked in your driveway, you’re responsible for those damages, too.

Your homeowners insurance won’t just deny coverage for damage to another’s property relating to your business operations-it also won’t protect your business property, such as computers, printers, and devices, from theft or vandalism.

Furthermore, if that tree falls on your home, causing damage, your insurer will repair your home and most damage to it-but not your business property. This may not mean much for some home businesses, but it could sink those with expensive supplies and equipment.

Liability loopholes

Remember: Any business primarily run from home is considered home-based. For example, aside from showing properties, real estate agents who primarily work from home are actually running home-based business. If you drive on company business you will need commercial auto insurance. Even if the business makes minimal deliveries, regular auto insurance won’t cover business-related losses. It works like homeowners insurance-if it happened during the course of business or is business-related, it’s not covered.

Denying that you run a home-based business is not the answer. If you cause an accident, injuring other drivers and damaging their cars, your personal auto insurance won’t provide coverage. And some insurers may cancel your policy, because failing to inform them of vehicle-use type is fraudulent.

Accidents

Similarly, if customers or clients are injured in an accident in your car, they aren’t covered. Without proper coverage, you’ll have to pay judgments or claims.

Auto accident lawsuits are expensive enough, but when people are injured or their property damaged in or by your “business” vehicle, the ensuing lawsuit could be substantial.

If someone else hits you and doesn’t have insurance, or has insurance but not sufficient coverage to pay for damages, you’d face another issue. If you’re driving for business, have standard auto insurance, and are hit, you’d better hope the other person is insured, because you won’t be able to claim under your personal car insurance’s uninsured/underinsured motorists (UM/UIM) coverage.

Everything you own, including your business, could be at risk. But with commercial auto and business insurance, you’ll have the peace of mind you need to get on with business.

Should You Share Your E&O Policy with a Client?

If you provide B2B services, it’s not unlikely a client will someday ask the question, “Can you add me to your Errors & Omissions (E&O) Insurance policy?” It’s happened to real estate brokers, financial planners, and even insurance professionals. And the best answer is probably no. Here’s why.

E&O coverage is a type of liability insurance. It protects you if you become legally liable in a situation where a client is harmed in some way due to the service you provide. This includes negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. None of this is covered by general liability insurance.

Sharing with an AI

Your E&O policy will typically cover court costs and settlements up to the amount detailed in the policy. You need it. But when you act on behalf of another company, that company may also be affected by your actions. And sued. So, should you make that company an Additional Insured (AI) so it will be covered under your policy?

There are good reasons why not:

  • The contract may not allow the third party to be added as an AI.
  • As E&O policies are industry-specific, the AI’s operations may differ from yours, so it’s hard to cover both in the same policy. The coverage may not be relevant to the AI’s needs.
  • If the AI decides to sue you, but is on the same policy, its suit will likely fall under an insured vs. insured exclusion clause. And the insurer may not cover either of you.

Ensure the Right Coverage: Provide the Right Information

Whether you’re a new home buyer or just reviewing your current policy, it’s important to get the right coverage.

Here’s how:

There’s a lot of important information about your home that you need to share with your agent, and knowing the answers beforehand makes the process easier for both of you. As a new buyer, you’ll be providing the information for the first time, while current policy holders will need to update the information through a regular policy review with your agent.

If you are a new buyer, your agent will need the purchase price, address, year built, and construction type, as well as the square footage and type of foundation. Don’t forget the dimensions of any garage, porches, decks, and basements. Your agent will also need to know if there are any “attractive nuisances” on the property (pools, trampolines, or playgrounds), and the proximity to fire hydrants and the fire department.

As well, you should include information on heat and electricity types, any additional heating, roof type, and plumbing details. Include information on home alarms and smoke and carbon monoxide detectors. If the home was built before 1990, note when the roof was last replaced and the heating updated. Finally, provide details of your previous policy and any previous claims.

If you’re reviewing your policy, consider whether any of the items above have changed. Have you built an addition, had your roof reshingled, added a pool, or changed your type of heating? It’s all important to your coverage. And to you.

Is Your Child’s ‘Stuff’ Covered in the Dorm?

Your child is leaving the nest. The car is packed to the hilt and pointed toward campus. Among your concerns about tuition, courses, and when you will see your child next, have you considered the contents of your car? Will your student’s belongings be insured in his or her dorm?

While the contents of a dorm room often include secondhand furniture and repurposed thrift store items, among these there will probably be a few pricey electronic devices, gadgets, and gear. Chances are you (and your departing student) have been too busy to consider the importance of insuring these possessions. Homeowners or renters insurance policies usually cover your student’s belongings in the dorm, but here are a few things you may not have thought of:

  • Check your policy. Confirm your student’s possessions are covered as part of your homeowners policy.
  • Check your limits. Policies sometimes limit dorm coverage to 10% of the total, meaning a policy providing $150,000 coverage for possessions at your residence may only provide dorm room coverage up to $15,000. That may seem like a lot, but consider the replacement cost.
  • Take inventory. Before it’s all crammed into the dorm room, make a detailed list, including values. Create a file including receipts for electronics and other high-end items in case you have to make a claim.
  • Consider options and alternatives. While your homeowners policy may cover your student’s laptop from theft, it won’t replace it if it’s shorted out by a spilled Frappuccino. For individual items, consider riders or special warranties that protect against such accidental damage. And, of course, items such as heirlooms and expensive jewelry are better left at home.

When your child leaves home for college, the experience can be wrenching, exciting, busy, and frustrating. Make sure it’s not a bad one by insuring your student’s personal possessions before you start packing the car.

Maximize Your Pension with Life Insurance

Life insurance in its most basic form covers your loved ones’ expenses after your death-but there are a number of other ways to use this financial product, and they aren’t only for the very wealthy or the financially sophisticated.

Other uses for life insurance

For example, a life-insurance policy can help cover a financial shortfall in a couple’s retirement income. Let’s say you have a pension plan, and it makes up a significant portion of your retirement income. However, like many pension plans, it ends upon your death. Social Security benefits may be insufficient, and the result could leave your spouse with little to live on.

One solution: Buy life insurance to provide for your spouse upon your death. This could be a lump sum that can be converted to an income stream via some basic investments in bonds.

Financing a life insurance policy

The cost of life insurance depends on your age and health. Your agent should be able to give you options. But if you still think life insurance is too expensive after reviewing those options, there are creative ways of financing it. You might, for example, take out a reverse mortgage, then use a portion of the monthly payment to purchase a life insurance policy. This has the added benefit of giving you a roof over your heads while providing for your heirs upon your death.

Peace of mind

The bottom line: Life insurance can be a way to maximize your pension or income from Social Security, plus the peace of mind you’ll have from ensuring that your spouse will receive an insurance payment on your death.

So, when reviewing your retirement plan, it’s a good idea to look at the details of your pension or Social Security benefits and consider how life insurance could be complementary to your plan. Your life-insurance agent can assist you with this.

Open Your Eyes to the Importance of Vision Care

If you’re searching for vision care insurance, the number of results from a Google search is staggering. Where should you begin?

Vision insurance covers or reduces costs associated with maintaining or improving your vision, including eye exams, contact lenses, frames, and lenses. Group eye coverage may be available where you work or through an association such as a credit union. However, a group plan may not be your best choice.

Some require special help

Your insurance agent can provide a tailored solution for your eye care needs. He or she will closely review each available policy’s benefits and make recommendations based on your family’s needs. Your agent can also tell you how often you can visit an eye doctor under your plan, as some plans include more frequent eye exams than the usual annual check-up. Those with chronic health conditions like diabetes or hypertension are more at risk for eye problems and may require a special plan. And if you’re considering refractive surgery to improve your vision, some plans offer reduced rates on this procedure.

If you already have an eye doctor, your agent can help you choose a plan that includes him or her. It’s important to know that by using an optometrist already approved by a plan you’ll likely pay less than you would outside the insurer’s network.

And don’t assume your vision policy covers eye infections or disease. Turn to your health insurance policy for health issues regarding your eyes. Vision coverage only defrays costs associated with vision exams and vision correction.

Because we often don’t consider vision insurance an essential like health coverage, we may overlook this important benefit. Even if you have never needed glasses, as you age an annual eye exam becomes vital to eliminating age-associated eye problems such as cataracts and macular degeneration.

Why not consider vision insurance? Plans can cost just dollars a month.

Insurance Scams: If It Seems Too Good to Be True, It May Be

The U.S. spends more than $3 trillion dollars each year on health care, and as the population ages, that figure will rise. Sadly, this industry attracts more than its share of fraudsters. The Federal Bureau of Investigation, which acts to expose and investigate health care scams, estimates that “tens of billions of dollars” are lost every year at the hands of insurance scammers, causing increases in everyone’s premiums. So how can you recognize a scam and avoid falling victim to one?

Here are two examples:

  • One way scammers take advantage of consumers is by offering fake insurance policies. If it sounds too good to be true, it probably is. Working with a licensed insurance agent is the best way to find reliable, legal health insurance.
  • Another popular scam is medical discount cards. Those who sell them promise deep discounts on everything from medications to doctor visits, but these promises are empty. In the end, you’re stuck with high fees and no benefits. To protect yourself, make sure you research any claims a discount card offers and contact your local insurance agent for further investigation.

In fact, the best way to protect yourself from scammers is by asking questions. Reputable companies and insurance agents will welcome them and will answer to the best of their abilities. They’ll discuss the pros and cons of different policies and how they might work for you. Scammers? Not so much. As a consumer, be diligent about researching policies or discount cards before buying. It will benefit us all.