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Small Business General Liability Insurance – What You Don’t Know CAN Hurt You

The number of small businesses operating from home has exploded in recent years due to downsizing and other factors. As a result, nearly half of all US homeowners are exposed to some type of business liability risk in their home. From the moonlighting laid-off contractor to the babysitter, to the part-time consultant, most small businesses operating from home have inadequate general liability insurance protection.

A business operating from home is almost completely excluded from liability insurance coverage in standard homeowners insurance policies, yet most small business owners mistakenly think they are properly insured.  The resulting lack of business liability insurance coverage leaves the in-home small business owner dangerously exposed to financial ruin from a lawsuit due to injury or property damage.

Do Your Business Insurance Homework

The key is to do your homework. Don't assume you have business liability insurance coverage under your homeowners insurance policy.  The annual revenue limitation for an in-home business to be covered under a homeowners insurance policy is a paltry $2,000.  Any higher, and most homeowners policies will exclude the exposure.  Even when operating for a time below the $2,000 revenue ceiling, there are limitations to what types of business exposures are covered under a homeowners insurance policy, and these often include many restrictions.

Purchase a Homeowners Insurance Policy with an In-home Business Liability Insurance Extension

Purchasing an in-home business liability insurance rider is the easiest and most economical way to cover your in-home business liability exposure.  Many homeowners insurance policies offer this rider for as little as $150 annually.  Some in-home business insurance exposures do not qualify for the homeowners rider. In such cases a stand-alone general liability insurance policy is the solution.

Need to upgrade your homeowner’s policy to properly insure your in-home business? Contact us for a free, no-obligation business insurance review at 1-800-943-2198.

INSURING YOUR CASTLE

The biggest and most important investment the average american family will make in a lifetime is his or her home.  The all-American dream is owning a home. Of course, choosing the right house insurance to protect that cherished home is an extemely important decision. 

Most homeowners insurance policies are similar in the types of perils that are insured.  The typical homeowners insurance policy is written under a form HO-3 "Special Form Perils" policy.  This policy typicallly insures your home against all direct perils with "named exclusions". This which means that if the cause of loss is not excluded, then the peril is covered. Standard exclusions are:

FLOOD, EARTHQUAKE, SINKHOLE, NUCLEAR, WAR, WEAR & TEAR

GUARD AGAINST THE PITFALLS OF CHEAP HOME INSURANCE

Even if most insurance companies cover the same perils, (things that can happen to your home), it doesn't mean all policies are equal.  The problem with cheap home insurance is that you often do not have a comprehensive policy, and, tragically, often this goes undiscovered until you have a claim. 

WHAT IS THE RIGHT AMOUNT OF HOMEOWNERS INSURANCE?

Often we see new home buyers getting house insurance quotes from companies insuring the dwelling for the purchase price.  Although your lender will be fine with insurance covering the dwelling amount provided it is at least equal to your loan amount, dwelling amount coverage will not be adequate in the event of a loss.

An Example of the Pitfalls of Underinsuring Your Home:  

Mr. & Mrs Smith just purchased their first home, an underpriced beauty in an older neighborhood.  Their real estate agent congratulates them for having achieved the American dream. They sign an agreement of sale and call the 1-800-cheap-home-insurance number they hear every night on TV.  Since they are purchasing their home for $100,000, the agent on the other end has no idea of the neighborhood or specific features of Mr. & Mrs. Smith's dream home. 

The agent quotes the Smith's a standard house insurance policy, and suggests insuring the dwelling for the amount they paid for the home ($100,000).  The bank is fine with the quote and accepts the policy because the dwelling is being insured for what the Smith's are paying for the home, which more than covers the bank loan. Settlement goes through and the Smith's feel safe and secure.

Six months later, a northeaster slams the area and knocks out power to the Smith's home.  Candles are lit to shed some light in the home and boy, what a mistake.  Next thing you know, a call to 911 and the Smith's evacuate their dream home with just the clothes on their backs. 

The house is a total loss!  Everything is gone.  The Smith's call up 1-800-cheap-insurance to file their claim as they sit in their hotel room worrying if they made a good decision with their homeowners insurance policy. 

A few days later, the Smith's find out that the home they purchased for $100,000 will actually cost $225,000 to rebuild at today's costs for materials and labor.  They start to get a sick feeling when they realize their cheap home insurance is not going to even remotely cover their loss. 

WHY YOU SHOULD BUY FROM A LOCAL "INDEPENDENT" INSURANCE BROKER

What could the Smith's have done differently to get the proper homeowners insurance coverage?  First, they should have contacted a local, independent insurance broker who could have gotten homeowners insurance quotes from a number of house insurance companies, resuting in the best price available.  Secondly, an experienced local agent would have encouraged the Smith's to consider the age, area and square footage of the home in calculating a proper rebuilding cost for the home. 

Thirdly, an experienced independent agent would know the "out of the ordinary" local perils that could damage the home such as a sinkhole, earthquake, or  surface water runoff.   For example, homes in a low lying areas should homeowners insurance policies with an extention of coverage for sewer back-up & sump pump overflow. 

THE AMERICAN INSURING GROUP DIFFERENCE

At The American Insuring Group LTD, our licensed professional agents will take the time to properly advise you on the house insurance you need and the optional coverage available.  We strive to give our clients exceptional advice and professional customer service so they know they will be covered in the event of a claim. We review your home insurance quotes in detail and explain each item of coverage and how it applies in real life.  All homeowners insurance policies have limitations and conditions, so our agents will take the time to explain them and discuss whether your needs justify a modification of the house insurance policy.   

It's always a good idea to get a second opinion on your home insurance policy.  Call American Insuring Group, LTD today at 1-800-947-1270.