As I’ve mentioned in previous articles, I had to deal with a house fire back in June 2011 that destroyed my entire home. I learned some valuable lessons from that experience that cannot easily be covered in just one article. So today, I’d like to expand upon what I’ve shared previously to reveal some additional pitfalls that could be putting you and your business at risk if you ignore them.
1. Separate Coverage Is Needed For Business Property At Your Home
One thing I’ve learned about insurance that surprised me is that most homeowner’s policies (including mine) have limits on how much business property in your home will be covered. If you’re like me, I do a lot of work from my home office. You can see the photo above of just the conference room I have in my home office. That doesn’t even count the other separate office areas that I have in my home.
Here’s why it matters. My main homeowner’s policy has a limit of $5,000 in business personal property in the home. I’ll bet yours has a similar limit.
So what is the solution to this problem? Well, you basically need to add your home office to your corporate insurance policy as an additional location (or as the only location if you work exclusively out of your home). But with most carriers, you need two separate policies two cover your business personal property as well as your personal use property.
Check with your agent for options that are available in your area, and for your scenario. But don’t wait until you have a disaster to find out that most of your business property in the home isn’t even covered.
Luckily for me, I didn’t have much business property in my home at the time of my fire, and I had all of my business property covered in separate policies. It would be very easy to miss this, as most people do. But during my house fire, I learned that my policy had the $5,000 limit on business property in the home, so my eyes were opened on how important it is to stay on top of these details!
2. Business Interruption Insurance Can Help You During Disaster
One type of insurance I have added after my house fire is “business interruption insurance”. I had tons of different insurance policies already, such as life insurance, health insurance, property and casualty insurance, auto insurance, commercial insurance, a personal umbrella policy, and more. I thought I was covered for pretty much everything.
The one type of insurance that I missed was business interruption insurance. This type of insurance can help provide income to your business when it’s operations are interrupted from a disaster such as a fire. Many people think that this type of coverage is automatically included in their main property and casualty policy. Unfortunately, the loss in revenue that your business suffers due to a disaster is NOT typically included as part of the building and personal property coverage.
The only thing that saved me during my house fire was the fact that I work with clients on a recurring monthly plan so I still had revenue coming in even when I was away from the office dealing with my fire. My clients were great about being flexible on the project deadlines during that time, and my revenue still came in at the same recurring pace every single month.
However, given what I learned from the experience, I now have business interruption insurance as well. In the unusual chance that I ever go through another disaster, I’ll also have the added income of the interruption policy covering my overhead for the period that my operations are disrupted due to rebuilding or relocating.
3. Business Owners Urgently Need Disability Insurance
I’ve also realized in the past few years just how critical it is for business owners to have disability insurance on themselves. Most business owners don’t think about adding such coverage for themselves. But what if you become sick with cancer, or some other disability that leaves you temporarily or permanently disabled. I also suggest that you talk to your agent about disability coverage if you don’t already have it.