Insurance tips for home-based business owners


Owning a business has been part of the American dream from the very beginning. And now because of the Great Recession and the Internet, more of us are finding our inner entrepreneur. There are currently 20 million home-based businesses in the U.S.

Small businesses often begin in garages.

For example, Kristin Pedderson operates Big Fuss Records out of a garage. She's working on her newest release, "The Dreamer." She produces and promotes her music and that created by others.

Her business is growing and what she offers is growing too.

Finney: So you have an indie label?
Pedderson: "Right."
Finney: "You do media, press releases and websites for people?"
Pedderson: "Right."
Finney: "You are incorporated?"
Pedderson: "Yes."
Finney: "Do you have insurance?"
Pedderson: "Well, that's next on the list!"

There are so many details when running a business it is hard to keep track of everything, but insurance cannot be overlooked.

"There was one recent study that found that 60 percent of micro entrepreneurs that have small businesses inside their homes do not have adequate coverage," said Joe Ridout with Consumer Action. "That's a lot of people."

Consumer Action recently put together a guide to insurance for small and home-based businesses.

"It's really all about protecting, not the assets of the small business, but your assets in terms of your home and your family's savings," Ridout said. "Because that is what a risk in case you into liability with your business."

So how much does this cost?

Tully Lehman from Insurance Information Network of California says from as little as $20 a year for a simple homeowner's rider to hundreds and even thousands of dollars for larger, more potentially hazardous businesses.

"The BOP is a business owner's policy and that is a much broader policy if you have any sort of manufacturer in your home or if you have inventory you need to keep track of and also any kind of professional liability risk, let's say you are for example a physical therapist, you want to have that liability coverage as well," Lehman said.

And that brings us back to the garage and Kristin Pedderson.

"It is such a blessing to hear you say this and bring it to my attention because I really feel like it's important to me at this point," she said.

And if you drive your personal car for business, be aware if you get in an accident you will probably not be covered by your auto insurance. That is something employers often fail to tell their workers, too. You may need to get a commercial auto insurance policy. You need to check with your agent or company.

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