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Identifying Coverage Gaps for Home-Based Businesses

May 18, 2015 12:48 am

For many, achieving the American dream comes with the freedom of operating a home-based business. But without proper insurance planning, even the most promising dream can quickly turn into a nightmare. Blurring the lines between home and work can have unexpected and costly impacts on all types of personal insurance, says the National Association of Insurance Commissioners (NAIC).

To avoid costly impacts, the NAIC recommends home-based business owners consider these personal insurance implications:

Home – Homeowners’ or renters’ insurance policies are rarely adequate for business needs. Owners may want to investigate a business owners' policy or general liability, business property and business interruption/continuation insurance.

Auto – If you own or lease a vehicle almost exclusively for business use, list the business name as the principal insured. Consider also increasing coverage to protect permanently attached items, such as a generator or storage unit.

Health – There are a variety of sources for purchasing HMOs, PPOs, EPOs and other popular health insurance plans at group rates. Under the Patient Protection and Affordable Care Act (ACA), business owners and the self-employed who purchase coverage through new health insurance marketplaces may qualify for tax credits.

Life – If the home business is a partnership, consider key person life insurance which names each partner in a business as beneficiary on the other partner's policy. If one partner passes away, the other can use funds to buy out heirs, pay off loans or continue operations.

Source: NAIC

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