Putting More Teeth In Your Home Office Coverage

For people who work out of their homes, trying to get proper insurance can be frustrating. Homeowner policies don't pick up most losses on business equipment or liability if someone gets hurt in your office. And many of the separate home-office policies insurers began offering five years ago don't have realistic coverage limits.

Now, insurers are seeking to correct the inadequacies. The changes initiated by Aetna Life & Casualty, for example, result in part from a survey that found that many home-based business owners mistakenly "assume their homeowner policy covers everything they need," says Robert Restrepo Jr., Aetna's vice-president for homeowner insurance. Aetna and its competitors are also looking to expand their home-office business to compensate for all the homeowner's customers they have dropped in areas hit by earthquakes, floods, and hurricanes.

Aetna's revised coverage increases protection for business-related assets and liability. Aetna used to pay a maximum of only $200 for cash losses and $1,000 for losses from accounts receivable, stolen credit cards, and cellular phones. Now it will hike each of the limits to $2,500 in a new home-office rider to its standard homeowner policy that it plans to introduce in October.

In addition to business-related injuries, the rider covers product and advertising liability for up to $300,000. But it excludes professional liability for doctors, lawyers, accountants, and even insurance agents. Annual premiums run about 25% higher than those for the old coverage with the lower limits. The package, including replacement cost for a $200,000 house, for example, will go for about $500 a year, with the home-office rider accounting for nearly half the total.

In response to Aetna's move, ITT Hartford Group is also considering increasing coverage limits for home offices. It now reimburses losses of $200 in cash, $500 from credit cards, and $1,000 from accounts receivable. For larger home-based operations, Continental is offering a separate $175-a-year home-office policy that covers up to a $5,000 loss from stolen cash, $5,000 from stolen credit cards, and $10,000 from accounts receivable, as well as $500,000 in liability.

UMBRELLAS. If the liability limits on your home-office insurance are not high enough to cover your needs, an umbrella policy can provide extra protection, says Sean Mooney, an economist with the Insurance Information Institute. It will pay for losses that go beyond the thresholds of the original policy. But keep in mind that umbrella insurance added on to a homeowner policy will cover business liability only if it's also covered by the basic policy.

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