People are working at home more than ever now. However, few realize they need special insurance for their home-based business. After all, they have homeowners insurance…they’re covered through that, aren’t they?

Unfortunately not. But if you didn’t know this, you’re not alone: According to the Independent Insurance Agents and Brokers of America (IIABA) 60 percent of home-based businesses lack sufficient business insurance coverage.

There are three types of insurance designed specifically for home-based businesses:

Homeowners insurance policy riders

Adding a rider to your homeowners insurance is the most economical, with an average cost of under $15 a year to obtain about $2,500 in additional coverage. This isn’t a lot, but it will often make a big difference to smaller companies; this option is usually only available to businesses with $5,000 or less in gross annual business and not much equipment.

In-home business policy

This policy is more appropriate for someone with several employees and a lot of business traffic in and out of their home. It provides more coverage for a variety of incidents, on average $10,000 or more, and costs about $200 a year on average. This policy also includes general liability coverage from $300,000 to $1 million, and limited coverage for loss of valuable documents or information, off-site business property coverage, and use of commercial equipment.

In most cases, you also will be covered for lost income and continuous overhead expenses (such as Internet service, website hosting, and phone service) if your business closes temporarily.

Business owners policy

Also known as a “BOP,” this is what most small- to medium-sized businesses need, and it is a great choice for home-based businesses that have items manufactured or produced elsewhere but run the business from home. It’s also good for those who make products at home to sell elsewhere or online. It includes all the coverage options seen in an in-home business policy, but on a larger scale.

Peace of mind

Paying for additional insurance policies may seem like more bills added to the pile, especially when you’re starting out and want to minimize your expenses. However, it’s one of the most important things business owners can do.

The consequences to a home-based business of not having the right commercial coverage can be dire. Losses will have to be paid out of your own pocket. If you can’t cover them, you could face lawsuits and may be forced to release assets such as your home, savings, business, or more.

Worst case scenario: You may have to return to being an employee to pay off the judgment through your wages. Until a judgment is paid, your assets will continue to be seized, likely meaning you’ll have to shut your doors for good.

Of all the worries you have as a small home-based business, having the right insurance coverage will minimize at least one; effectively, having the right insurance provides peace of mind.

Look at it as an investment equal to the protection you may get from working for someone else.

In 2012, Goldman Sachs employee Greg Smith quit his job. Instead of bemoaning his fate in private, Smith wrote a New York Times op-ed piece saying that Goldman’s environment was “toxic” and that the company “sidelined” clients’ interests.

There’s no telling how many people read that piece in print and online, then shared it via social media. And that’s not even allowing for the thousands of words written in post-publication commentaries.

However, apparently as a result of this firestorm, Goldman Sachs experienced a whopping $2.15 billion decline in market value. That’s how expensive damage to a company’s reputation can be.

With word spreading so quickly via social media, it’s now essential for companies large and small to guard their reputations. Although reputation insurance is now primarily accessible to the “big kids” on the playground, it’s worth keeping an eye out, because it likely will be available soon to small and medium-sized businesses (SMBs).

How can an insurance policy put a stop to rumor mills? Most reputation policies provide companies with public relations expertise before something happens, and it covers the costs and expense of anything from recalls to damage control if something does happen. It would not only cover losses like Goldman Sachs’, but also the repair costs, too.

Currently, most reputation insurance products cost roughly $10,000 annually. As business magnate Warren Buffet once said: “It takes 20 years to build a reputation, and five minutes to ruin it.”

Summer is finally here. What sunshine-filled adventures do you have planned? Maybe they involve tents, towable pop-up campers, or luxurious motorized vehicles. You’re ready, but are you properly insured? Here are some factors to consider before wandering into the great outdoors:

Tents or gear: Your car is covered under your auto insurance policy, but the policy typically doesn’t provide coverage for personal belongings. If your tent and/or camping gear is damaged in an accident, fire or storm, auto insurance won’t cover your losses. That said, these summer essentials can be covered under renters or homeowners insurance.

Motorhomes: Motorhomes need to have the same minimum liability coverage required for any vehicle. Since risk of serious injury is greater due to a motorhome’s size, it is highly recommended you carry liability limits higher than state minimums. For physical damage to the motorhome, you’ll need comprehensive and collision coverage, just like any vehicle. Unlike standard auto policies, most insurers will provide contents coverage on motorhome policies.

Towable pop-up campers: Whenever you pull something with your vehicle, the vehicle’s liability coverage extends to the item you’re pulling. Since the risk of injury to others or property damage is higher if you’re pulling a camper, opt for the highest liability limits available.

Note that this coverage is for liability only. Physical damage coverage isn’t extended from your vehicle’s policy to whatever you’re pulling. To cover damage to your pull-behind, add specific comprehensive and collision coverage for it.

Commercial property owners know that insurance is worth it, despite its cost. However, there are ways to keep insurance costs low, depending on business type and possible discounts. To manage this in a savvy way, here are a few ways to minimize the potential for losses:

• Hire and train quality employees: Employee theft is a leading cause of loss for most retailers. Dead bolts and alarms won’t stop it, but screening potential employees thoroughly may help minimize losses. Also, train your employees and ensure they have appropriate safety gear and a healthy, safe work environment.
• Thoroughly inspect grounds and buildings daily, and identify and correct new hazards immediately. Insurers may deny claims if they believe losses occurred because of unaddressed, ongoing hazards. Always be on the look out for possible hazards such as leaky pipes and unsecured hazardous materials, as well as compromised security measures such as broken locks, and anything that poses a risk of injury to employees or customers.
• Add security features. Monitored alarm systems with video are preferable, but adding any security measures to reduce or avoid theft usually results in an insurance discount. Install dead bolts at every entrance and on additional buildings or storage. Attach tracking or alarm tags to easily stolen or high-value items, and consider keeping them in locked, break-resistant display cases.

For more loss-prevention ideas and discounts, contact my office to help you minimize your risks and your insurance premiums.

You know what they say about assumptions – never make them, particularly if you’re a business owner, and particularly when it comes to insurance.

Too many business owners mistakenly believe commercial insurance policies provide blanket coverage for just about everything. Unfortunately, that’s not the case, and there are a few things you definitely shouldn’t assume about commercial insurance coverage.

Here are three of the biggest misconceptions you need to be aware of:

Misconception 1: Damage from floods is covered.

Similar to homeowners insurance policies, commercial property insurance policies do not cover flood damage at all…ever. Coverage has to be purchased through the National Flood Insurance Program (NFIP).

Too many business owners found this out the hard way during Hurricane Katrina; they assumed their destroyed businesses would be covered under commercial property insurance coverage. In fact, they weren’t and aren’t, and the result was that many businesses never re-opened after Katrina.

Misconception 2: Commercial auto insurance covers any vehicle you drive.

Unfortunately, if you’re driving a rented car or one borrowed from an employee and have an accident, your commercial policy would not pay for any damages – not for the car you were driving nor for another person’s property damage or bodily injury expenses. Note that it doesn’t matter why you were driving the vehicle.

Since commercial auto insurance won’t cover losses arising from accidents you’re involved in when driving a vehicle you don’t own, hired vehicles also won’t be covered. If you rent a car to make a long business trip and have an accident, and have not opted for insurance through the rental car company, you may have been driving uninsured.

If you frequently rent cars or other vehicles for business purposes, add an endorsement for hired or non-owned cars.

Misconception 3: You’re covered worldwide.

So you’re off to Europe on business. Whether or not your commercial insurance policy is folded up in your carry-on bag, you aren’t automatically covered for any losses relating to your business that occur while you’re in Europe. Many people believe they’re covered worldwide under commercial insurance, because they know that in most cases, your homeowners insurance follows you worldwide; if your valuables are stolen while you are away from home, your homeowners insurance would cover your losses.

Typically, commercial policies only extend coverage through all of the U.S., U.S. territories and Canada. Have no fear, though; you can usually get a worldwide coverage endorsement added to most commercial insurance policies. It will mean paying a little more in premiums, but you’ll undoubtedly enjoy your business in the City of Lights or the home of Buckingham Palace more, knowing that you’re covered should you incur any losses.

In summary:

It likely won’t be the favorite part of your job, but understanding your commercial insurance policy and its coverage is essential for business owners. Without it, you stand to lose everything, including your business. You know what your business needs, so talk to my office about your options and find the protection that best suits you.

No matter what line of business you’re in, you probably have one thing in common with other businesses: Most businesses benefit from information databases, communicate via email, and handle other tasks on a computer – online or offline.

Technology allows businesses to communicate with customers as never before and to work more efficiently than ever. But that efficiency comes with a price – major security issues. Even the U.S. government is taking new measures due to an increase in cyber attacks; between 2006 and 2010, computer security breaches increased by a whopping 650 percent, and they have increased since.

Risks include

• damages from unauthorized access to computer systems by third parties
• disclosing or misusing private information, whether this is committed by the business or because the business failed to protect against unauthorized individuals obtaining this information
• transmitting a computer virus or sending an email that causes a crash
• defense and damage costs from alleged copyright, trademark, title or slogan infringement
• defense and damage costs from charges of defamation, libel or slander caused by emails, website or blog content, or postings in online forums

While this is scary, you have options: cyber liability insurance (also called technology errors and omissions insurance).

What does cyber liability insurance cover? Like all insurance policies, options vary, and each business’ requirements are different. The important thing is that you get the right coverage for your needs. Cyber liability insurance typically provides coverage in six main areas:

• Business interruption – If your company is the victim of a cyber crime, this covers revenue losses whether you experience a temporary shut-down or a long-term interruption.
• Notification expenses – Most states have notification requirements dictating how and when a business must notify parties whose private information was possibly compromised or obtained by someone without authorization. In some cases, a business must provide ongoing credit monitoring or identity-theft insurance. This covers that.
• Content liability – Like homeowners insurance, which protects your personal property, content liability helps pay for anything related to your online content and provides protection from copyright claims, slander, invasion of privacy and other IT claims.
• PR and crisis management – If your company experiences a security breach, the company image is tarnished. This coverage would help pay for subsequent public relations and marketing efforts required to restore the damage done to your company’s brand.
• Data loss and system damage – If you’ve always assumed your current commercial liability policy includes computers under personal property coverage, you may be surprised to find it that it only covers the computer itself – not what’s inside. Computer data isn’t protected under other insurance products, so this coverage is vital to the functioning of the company and its systems.

What factors do you believe determine insurance rates? If your answer is: At-fault accidents, violations, where you live, property value, and what you drive, you’re right.

You’d also be right if you mentioned other factors such as age, experience, claims history, and prior insurance coverage. But here’s one you may not have guessed: Your credit history. And this is something – unlike age – that you can control.

The credit link

Research firms have found a link between bad credit and increased claim-filing. They also found that individuals with better credit have fewer traffic violations and accidents than those with bad credit.

After looking at data from roughly 1.4 million policies, the Federal Trade Commission (FTC) found insurers paid out almost twice as much for claims made by those with poor credit compared to people with higher scores.

The FTC said that credit scores are predictive of the number and cost of claims filed, and are effective at assessing risk and rates.

Good credit equals lower risk

Customers who pose less risk in all the factors used to calculate premium rates pay lower premiums. The corollary is that high-risk customers pay higher rates. The “credit” factor is similar to any other factor, such as make of car, at-fault accidents, your neighborhood, and your claims history. It will impact your rate.

While it’s unlikely you’ll start making financial decisions based on how they might affect your insurance premiums, it’s important to know how insurance companies establish premium rates.

What you can do

Understanding why credit affects rates can make you more aware of those things that affect your credit score – missed payments, high credit card debt, and even closing a credit card or an account. Controlling these factors can make a difference.

Make your good credit work for you. Not just when you apply for a mortgage, but also when you purchase insurance.

Depending on the type of business you own, you or your employees may drive regularly on the job. Maybe you own a delivery service or trucking business, but regardless of how you and employees use commercial vehicles, your company risks accidents. And this risk is real; there are more than 5 million commercial vehicle accidents annually.

If that doesn’t convince you to carry commercial auto insurance, consider this: The average commercial vehicle accident with injuries costs an employer $74,000, and $500,000 or more when fatalities occur. And that’s not likely to change any time soon.

But what’s a commercial auto policy like? What are the most common commercial vehicle accidents? How do you file a claim? And most importantly, how can they be prevented? The most common commercial auto claims are often covered by a process similar to those for personal auto policies, as described below:

No-fault accidents: Insurers will file a claim with the at-fault party’s insurer, and the other party’s collision and/or liability coverage will pay for your repairs and incidental expenses. If the other person doesn’t have insurance or doesn’t carry enough coverage to pay your claim, your commercial policy would pay out under uninsured/underinsured motorists’ coverage.

At-fault employee accidents: Collision coverage would pay for your damage, and your liability coverage (property damage and/or bodily injury) will cover the other party’s claim.

When an employee hits an animal: Your commercial policy’s comprehensive coverage would pay for the damages to your vehicle.

Damage by something beyond your control: This includes hitting an animal, damage resulting from poor weather conditions, theft, broken glass, falling tree limbs, and more. Your comprehensive coverage would pay in this scenario.

In a minor accident, or if you or one of your employees is at fault, evaluate whether it’s worth filing a claim. If damage costs add up to less than your deductible, it may be better to pay them out of pocket to avoid harming your claim-free status. However, if you need to file, follow these steps immediately:

• Determine if anyone is injured, and contact the police or ambulance service.
• Contact your insurer to report the accident.
• Collect and record important information before making a claim; this should include names, license plate numbers, witness contact information, vehicle information, and insurance information.
• Record accident details. Take pictures of the accident.
• Make a claim.

Preventing Commercial Auto Insurance Claims: You want to avoid claims, but accidents happen. Taking measures to prevent claims is crucial and include:

• Keeping safety checklists in company vehicles. .
• Coaching employees on safe driving, and setting rules, including hands-free phones only and seatbelts required.
• Establishing commercial vehicle safety criteria and checking it regularly.

If an accident happens on the clock, you’ll be glad you obtained the right coverage, especially in an at-fault accident; when commercial vehicles are responsible, you’re more likely to see larger claims and lawsuits. And with commercial vehicle accident costs skyrocketing, it’s always better to be safe than sorry.

Whether you own a large or small business, workers compensation insurance is a must. Some states require it, but regardless of whether or not it’s required, this important policy protects your employees and your business.

Workers compensation insurance protects you from being sued. If an employee is injured on the job, that employee can sue you for injuries developed as a result of the accident. With workers compensation, an injured employee forfeits the right to sue and receives cash benefits to cover medical expenses, lost wages, or other incidental expenses.

Costs

Without workers compensation, you’d be liable for damages that are probably well in excess of your workers compensation premiums. My office can explain how rates are determined in your area. It’s important that employees notify you immediately if they’re injured while working. Plan for this eventuality and post the plan for workers to see. Naturally, your first step is to deal with the employee’s injury, then file a claim.

Claims

Workers compensation claims are investigated; ensure you provide as much information as possible. Once the claim is deemed legitimate, your workers compensation insurance will pay benefits to the injured employee. Workers compensation is a safety net for employees, but also provides protection for your business.

If you don’t have a workers compensation policy, talk to my office…for everyone’s sake.

People are afraid of doing anything that might cause their auto insurance premiums to increase – even filing a claim for damages that someone else admitted to causing.

In this situation, do you make a claim with your insurer, or do you wait for the other party to file a claim with his or her insurance company?

Although you might be reluctant to contact your insurer, you should always do so. If the other party never makes a claim, you could be left paying for the damage he or she caused. You should also immediately file a formal claim with the other party’s insurer.

If he or she disappears or has given you false information, you can rely on your own policy’s uninsured/underinsured motorists’ coverage – and rates shouldn’t go up.

In general, if you need to file a claim for damage that isn’t your fault, it’s unlikely your premiums will rise unless you have had multiple claims, especially in a one-year period. If you’ve had four accidents in a year, even if none of them was your fault, your insurer will take note.

This claims history may signal fraud, bad driving habits, or bad luck – none of which insurers like.

If you have a bad claims history, and the accident hasn’t caused major damage, both parties might consider leaving insurers out of it. But do ensure you write down the at-fault driver’s license and plate number, as well as insurance and other pertinent information.

Remember, if you’re suspicious, contact your insurer regardless.