Few SOHOs Have Adequate Coverage
Golden Eagle Insurance Corp. has begun offering an endorsement on its homeowner’s insurance policy to help protect home-based businesses , something many entrepreneurs mistakenly think they don’t need, according to a recent survey.
“Feedback from both our agents and policyholders indicated a real need for insurance protection for home-based businesses,” said Kirk Krikorian, vice president of personal insurance for the Downtown-based company. “A lot of people are becoming involved in some form of home business through the Internet and need that extra protection but they are not aware that they don’t have it.”
A recent survey by the Independent Insurance Agents of America found that 60 percent of the nation’s estimated 12 million to 18 million home businesses were uninsured for business losses, said Stephanie Macadaan, a spokeswoman for the Insurance Information Network of California, a nonprofit trade organization.
About 70 percent of those who were uninsured said they didn’t buy insurance because they believed they were protected by their homeowner’s insurance policy, she added.
“The biggest misconception out there is a homeowner’s policy will cover business-related losses for a home business,” Macadaan said. “Most homeowner’s policies have around a $2,500 limit on loss of business property stored in your house, and if you are keeping inventory in your house a major loss wouldn’t be covered.”
– Protection Needed
By Professionals
For professionals such as accountants who have clients visiting their homes, the standard homeowner’s policy won’t provide protection, she said. Several other insurance companies in the past year have also begun offering the endorsements to protect home businesses, she said.
“If clients come into your home and one of them falls down and sues you, there won’t be any homeowner’s policy protection.”
Krikorian said his company’s basic endorsement costs about $200 a year.
“A lot of these types of endorsements provide coverage for lost income, or what is also called business interruption insurance,” Macadaan said. “That means if you have a fire, and fixtures or inventory are destroyed, then your business interruption insurance would pay you for your lost income until you can resume operations.”
Krikorian said Golden Eagle officials began studying offering home business insurance about a year ago. It was not only the rise in home-based Internet businesses that prompted their interest, he said. There were also a growing number of the company’s customers who were offering accounting, secretarial, tutoring and telemarketing services out of their homes as well.
– Coverage Varies
For Individuals
He said the new endorsement also covers businesses against claims of commercial slander.
Businesspeople can buy from $100,000 to $1 million in coverage, he said. The amount of coverage they need depends on their annual receipts, he added.
He said Golden Eagle would begin marketing the endorsement by sending a flier on it along with mailed billings. The independent agents who sell the policies will also be contacting customers and potential customers, he said.
He estimated between 5 percent and 10 percent of his company’s homeowner’s policyholders would probably need the endorsement. The company has about 60,000 homeowner’s policyholders.
In addition to offering liability and inventory protection, the new endorsement also covers the policyholder for business data loss, he said.
Scott Hauge, a spokesman for the San Francisco Small Business Network, a non profit trade organization, said that studies he’s seen have shown a tremendous untapped market.
“In 1998, the Small Business Administration came out with statistics that there are 837,000 businesses with more than one employee in California and the number of businesses here with no employees other than the owner was 1.58 million,” Hauge said. “I suspect most of those one-employee businesses are based in the home and I would estimate that less than 25 percent of them have business insurance.”
The U.S. Department of Labor recently predicted that by 2005 the largest industry in the country would be self-employment, Hauge said.
“I do think that a lot of education is needed to inform the home business owners, because most of them assume their homeowner’s policy will cover them,” Hauge said.
Rubio’s Reports Surge in First-Quarter Revenues
The fish-taco business continues to sizzle, as locally based Rubio’s Restaurants, Inc. recently announced that its first-quarter revenues surged 39 percent to $19.9 million.
In the quarter, which ended March 26, Rubio’s net income had increased to $269,000, or 3 cents a share, it reported. In the same quarter last year, net income totaled $45,000, or 1 cent a share, Rubio’s officials said.
