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Work from home? You have some things to consider regarding insurance.

There are millions of small business owners that work from home. If you are one of those that work from home, you need to know that not understanding the considerable differences between personal and commercial liabilities and insurance coverage can be a major exposure for you and your business.

Bottom line – if you assume your personal insurance policies for home, auto, life and health will automatically protect your business interests, you may be in for a few big surprises. Let’s look at some things you should know.

Homeowners' or renters' insurance policies are rarely adequate to cover the unique needs of a home-based business.
Most personal policies limit coverage for business property losses or damages to $2,500 in the home and $250 away from home. These policies tend to exclude business-related liability claims from persons injured on your property. Further there is typically no protection provided to sustain the business during downtime associated with a property loss – so you need to consider if your business can maintain if you lose your home. To close these gaps, owners may want to investigate the purchase of a business owner’s policy or general liability, business property and business interruption or continuation insurance.

While all auto insurance policies are similarly structured, there are important distinctions between personal and commercial vehicle coverages.
Most often commercial auto insurance carries higher liability limits and includes special provisions for rented and other non-owned vehicles, including employees' cars driven for company business. If you own or lease a vehicle almost exclusively for business use, make sure the business name is listed as the principal insured. You also may consider increasing coverage to protect permanently attached items such as a generator or storage unit.

In most cases home-based businesses often no longer exist once the proprietor passes away, so life insurance is most often viewed as a personal, non-business concern.
What to consider - if your home-based business is a partnership. One way to help secure the organization's future is Key Person life insurance. This type of policy names each partner in the business as beneficiary on the other's policy. If one partner dies, the other can use the life insurance payout to buy out the deceased partner's heirs, pay off outstanding loans or other obligations, as well as continue operations.

For small, home-based businesses, finding affordable health insurance for you and your employees used to be a challenge. But without health insurance, it is conceivable that one catastrophic event could dissolve the business. Today, small and home-based businesses have a variety of sources for purchasing HMOs, PPOs, EPOs and other popular health insurance plans at group rates. And under the Affordable Care Act (ACA), business owners and the self-employed who purchase coverage through new healthcare marketplaces may qualify for premium tax credits and subsidies. Failure to purchase appropriate health insurance could result in a tax penalty.

Most states require you to purchase workers' compensation insurance even if you have only one employee. If you don't have workers' compensation when an incident occurs, your business may be liable and you will lose the limitations on an employee's ability to sue you specified in the workers compensation law.