Insuring Your Home Based Business

Many of us who work from home either do not consider that insurance is needed, or think we are covered by a homeowners policy for most home business related events. Either assumption may place you, your home and your business at risk. Proper insurance can be one way to insure that the business is well protected. This article will examine what aspects of a home based business are covered in a standard homeowners policy and then give advice on how best to protect your home and your business.
What do you mean it’s not covered!?

It is simply not enough to rely on a standard homeowners policy when involved in a home business. Here is a break down of some things typically not covered in a standard policy and some examples to put them in perspective):

    Other structures, used in whole or in part for "business," are not covered. This means that a detached garage used for a home office is not covered. Also excluded is equipment used in the business whether personal or a client’s. This means that the computer you were fixing in your home based computer repair shop is not covered when there is a fire in the garage.
    Any part of a premise rented to a policy holder for business is not an insured location. In this case, renting a hotel room for a network marketing meeting does not insure the location. Under a business policy, the rented room would be covered in case your prospects get a little riotous.
    Under the "Special Limits of Liability" section, standard policies do offer $2,500 in recovery for property in the home that is used for business. However, if this limit exceeds $2,500 (like my computer does), only $2,500 can be recovered. To continue with this category, merchandise that is used in a business that is destroyed or stolen is covered up to $2,500. So you won’t be able to store much inventory if you happen to have such a business.
    In the same section "Special Limits of Liability," you would only be able to recover $250 for property that is damaged at or stolen from home. This means that when the fancy laptop is stolen, only a fraction of its value can be recovered. If you are delivering merchandise to a customer and it is damaged en route, you would also only be able to recover $250.
    Under a business policy, data that are destroyed (accounting records, computer documents, etc.) are covered. Not in a homeowner’s policy. One interesting item is that software is covered if it is available in the retail market. So the new copy of Windows is recoverable but not the custom software for which you paid mucho deniro.
    Be careful with the transfer of funds. Homeowners policies do not cover loss arising from business use or dishonest transfer of funds. In layman’s terms, if you accept counterfeit cash, your best bet is to pass it off to someone else, since it is not covered. If someone gives you a bad credit card, you cannot recover that money either.
    A homeowners policy does not cover injury to individuals who are hurt at your home when in the course of business. For example, a prospect comes to your home for a meeting. She trips on your rug and breaks a leg. You would be covered for a visiting guest, but since she is at your home on business, there is no coverage.
    There is no coverage for a service you perform. Continuing with the example of the computer repair shop, if you fix a computer, it overheats, and burns down the client’s home, you would be personally responsible. There is no coverage from your homeowner’s policy. This also means that services you supply are not covered, such as a home based CPA, who gives bad tax advice and is held accountable when the IRS audits the client.

In fairness to the insurance company, homeowners policies are not written to cover business in the home. Therefore, you may also have broader or more restrictive coverage than those listed above. As always, it is best to check with your insurer, or read the policy closely.
How do I get covered?

There are options for home businesses that want to be protected for any of the above circumstances, or a variety of others. Many insurance companies offer a number of endorsements (changes in coverage) to protect home professionals.

There are three main ways to insure a home based business:

    Broaden your existing policy – many carriers offer to go over the existing policy and make endorsements to cover specific events. For example, if you see a lot of clients at home, you may need to extend coverage to include protection for harm to a visitor during the course of business.
    Obtain a specific home based business endorsement available by some carriers. Some of these policies are very specific, for example, to insure home based day care centers, or to cover merchandise (especially food products).
    Obtain regular commercial coverage called a Business Owner's Policy (BOP).

The third option is possibly the best, because it is tailor made to your business’ needs and affords the most coverage while not breaking the budget. Generally, this is for professionals who work full-time on their home business. Since premiums on most Business Owner's Policies range between $250-500 annually, this is a cost-effective way to protect the business. Certainly, the cost will also depend of the size of the business.

If you are serious about your home based business, highly consider obtaining the right coverage to protect your livelihood. The price tag of the policy may seem like an extra, unnecessary expense, but the cost of a lawsuit of loss of valuable merchandise is enough to warrant up-front protection.

What every work-at-home mom must have

Like 99.9% of all work-at-home moms, you are bound to have interruptions during your day. Your little ones need lunch, need a diaper changed, need a nap and are crying their eyes out, or are in the middle of fighting for a toy. These are not ideal circumstances to be answering the telephone under, yet, you don' t want to miss the call and possibly lose business. Let me tell you about 10 things you MUST have if you're going to work with your children at home.

1. A Separate Phone Line: This is absolutely critical. Even if it's just a "smart ring" from your phone service provider, you need to know when that phone rings whether it is a business call or a personal call. If it's your mother on the line, she knows what her grandchildren are capable of (she raised you, didn't she?), but if it's a potential client on the line, then it's better if they get the voicemail.

2. Voicemail: I highly recommend this one over an answering machine. It allows you to be on the phone and still pick up messages, you can call from anywhere to check it, and it's very inexpensive (less than $10 per month in our neck of the woods).

3. A Schedule: Time management will be the "make it or break it" of your business. If you manage your time, you will learn when your children will play nicely together, when their grumpy times are, and when their naps are. Return important calls during naptime. Play with them during the grumpy times when they want mommy. Make appointments, either in-house, or such things as the doctor's office, when you know your children will not be overly tired or trying to get your attention. If your two-year-old wakes up from his nap at 3:00, 2:30 is not the time to schedule with a new client...you know how cranky the little ones are when they first wake up, and how much they want to be held. Try scheduling that appointment for that right-after-breakfast-when-all-is-well time slot, or 30 minutes into naptime. Plan your days, then work your plan.

4. Cordless Phone: I don't know how I ever lived without this one! When you are on the phone, you can rescue your 5-year-old from the bathroom sink, move the children outside to run and play (just carry your notebook with you), or fix another cup of juice. Trust me, this one is essential. Even better if you can afford it: a hands-free headset.

5. A Childproof Office: If you haven't done so already, read the article I wrote on childproofing your office. By getting the distractions out of the way and offering your little visitors something child-friendly, you will avoid saying "No" while on the phone, or stopping what you're doing to stop your two-year-old from hitting the reset button on the computer.

6. Email: How I ever got along without it, I'll never know. Email is the wonder tool for work at home parents! I can respond to messages at my convenience, research an answer before responding, and clean out the box one message at a time in between playing with the little ones.

7. A Back-up Babysitter: As a stay at home parent, we usually don't need child care, but recent experience has taught me to have one in line in case of emergency. If you have a hair appointment, or one child is sick and needs to go to the doctor, it's a great idea to schedule those appointments for late in the day and hire a teenager to come sit. The only time my children get sick is when the healthy one spends time in the waiting room of the doctor's office, so it's well worth paying $5 for an hour of sitting versus $35 plus another prescription.

8. A Budget: I'm as guilty as the next person of cashing a check from a customer and going to buy diapers. But the fact is, when those checks come in, there are bills that must be paid. Don't put yourself out of business by not knowing what your expenses are and having an income goal for each month. Buy those diapers in emergencies or when the budget is actually "budgeting".

9. A Collection of Children's Movies: Now, I'm not advocating that you let the television become your babysitter, but the fact is, sometimes YOU need a break, you may be under a deadline, or something needs your urgent attention. If you can plug in a favorite video, you can grab a few minutes (or maybe even an hour) to complete a phone call, finish a project, or work with a customer.

10. A Break!: Take some time for yourself at night when they're in bed. Running a business, a family, a home, and a marriage can take it's toll if you don't spend some time doing what you love. Fill the bathtub with bubbles, grab a good book, and go soak for awhile. Paint your fingernails, go shopping, plant flower beds, take up a hobby or craft, do ANYTHING but housework, laundry, childcare, or your business. By refreshing yourself once or twice a week, you'll find your stress levels lower and your productivity higher.

How to Balance your ‘Day Job’ with your Home Business

You’ve got a great idea for a business. You’ve got what it takes to be an entrepreneur. But you’re not quite ready to give up the security and benefits of your current job to take the plunge. So, you decide to do both for awhile.

Working for someone else and working for yourself at the same time will inevitably cause some conflict, whether with your boss, your schedule, or at least your sense of priorities. But, it’s not impossible to do both things, and many people manage it quite well. Here are a few tips:

Do find out what your company’s policy (official and unofficial) is on "moonlighting." Have you agreed in your contract to let the company own you and your time 24 hours a day 7 days a week? What precedent has been set by other employees who have been discovered working another job or starting their own business? With this knowledge you can make an informed decision on whether keeping your day job and starting your own business would be a conflict of interest.

Do let your clients know when you are available to conduct business. You may fear you won’t be taken seriously if customers know you aren’t devoted full time to your business. However, you will make a far worse impression if you say you are available from 9 a.m. to 5 p.m. and never answer calls during that time. Customers will be frustrated by failed attempts to reach you, and interpret your lack of prompt response as being unprofessional.

Do keep one, and only one, calendar. It might seem logical to have one calendar for your job and one calendar for your home business, but this only works if you are literally living two separate lives. When you’re setting up an appointment to meet with an investor or new client, it’s important to know that you’ll be out of town for three days at the beginning of next month for a trade show.

Try using a comprehensive organizer or day planner (I recommend ones made by Franklin-Covey) in which you’ll have room to record long-term commitments and goals, as well as short-term planning, project tracking, to-do lists, expenses, and other important information all in one easy to access place.

Do find and take advantage of "lost" time to make your schedule and overall life less hectic. It can be quite a chore to balance the demands of your day job and the demands of starting your new business. Instead of staying awake until midnight every night to play catch up, attempt to get some of the little things done at times when you normally are idle, like the 30-minute commute on the train each morning, or while you’re waiting for your children to come out of school in the afternoon.

Working At Home Doesn’t Have To Be Lonely

For all of the countless advantages of having a home office, one disadvantage which comes to the surface during the holiday season for some people, is the social isolation.

Even if your children and spouse are home with you, or you deal with clients every day, it’s not the same thing as interacting with co-workers. It is important to have a network of people in your life with whom you can share your professional interests, successes and challenges, and with whom you can connect.

The holidays can be especially lonely for the new home business owner if you once enjoyed socializing at office get togethers, gift exchanges and corporate parties. These occasions provide people with a much-needed opportunity to join with colleagues, look back at the previous year, and celebrate their accomplishments. It is perfectly normal to miss them.

If you are feeling alone, first of all remind yourself that office life wasn’t always a party. In any office, for every friendly chat around the water cooler, or thoughtful secret Santa gift, there are a dozen or more problems born out of co-worker relationships.

Be thankful you don’t have to deal with petty gossip or feel pressured to chip in your hard-earned money every time someone has a birthday or baby, or is selling a pizza kit. Also be thankful for your newly-found privacy and comfortable, quiet work environment. Would you even think twice about going back to spending eight hours a day crammed in a gray cubicle?

Once you’ve reminded yourself that it’s not the office you’re missing, it’s the social interaction, realize that even though you work at home, there are plenty of opportunities for you to meet people who share your professional interests, and cultivate relationships.

But, of course, people not going to come knocking on your door. You need to be proactive.

Order a new box of business cards, if you are running low, because you’re going to want to give one to every person you meet. Then, consider doing one or more of the following:

Join a professional association. One exists for practically every trade from writing to accounting to wedding planning. There are also organizations geared to entrepreneurs and home-based business owners. And, there are associations designated just for women. The Internet is a good place to begin your search. Also ask your local librarian.

Make connections through your university’s alumni association. Visit your alma mater’s Web site and update your records, if you haven’t done so recently. Yes, you may begin receiving solicitations for money, but there are an array of benefits. Most colleges have alumni magazines or newsletters that will update you on what your classmates are doing, as well as opportunities for networking and socializing. Make an effort to get in touch with old friends who are now also entrepreneurs or who are working in the same field as you.

Sign up for a continuing education class. In addition to learning new, up-to-date information and skills, you will have the opportunity to meet fifteen, twenty, or more people who have the same interests as you do. Don’t hide alone in the back of the classroom. Talk to your fellow students, start a study group, make friends.

Ask someone to become your mentor or career coach. Or become a mentor or career coach for someone else. Either way, you will gain a fresh perspective on your professional life and form a long-term bond with someone who shares your passion.

Again, university alumni associations are a good place to begin your search. There are also many sites on the web that will help match you with someone.

The best thing about the relationships you form through these channels is that, unlike relationships with co-workers in an office setting, you can set the boundaries. If you only want to get together with one or two people on a monthly basis, you can do that. Or, if you want a complete network of people with whom you are in contact frequently, you can have that too. Meanwhile, you can still enjoy all of the benefits of working at home alone.