Are You Covered? Check Your Insurance Policy

Just because you have insurance doesn’t mean you’re covered for all events. Policies have exclusions that say the company isn’t responsible for payment if certain events occur.

Here are some situations you might want to look more closely at in your policy.

Is your home office covered under your homeowner’s policy?

If you operate your business from home (whether or not you qualify for a home office deduction), your policy for liability and property protection may not help your home office.

• Check to see if inventory, samples, or other supplies stored in your home office are covered.

• Inquire about the limitations on coverage for loss of a computer in the office or away on business.

• Find out if injuries to business guests are covered.

If you discover that you’re not covered, you may be able to add a rider to your homeowner’s policy. Alternatively, you may want to take out a business owner’s policy (BOP) to cover property and liability exposure.

Is business driving covered under your personal car insurance policy?

If you use your personal vehicle for business — to see customers and vendors, travel between work sites, attend meetings, etc. — see whether your policy covers accidents that might occur on these business trips.

• Check whether you are covered if your employees drive your vehicle. There may be limits on the protection for permissible drivers other than you.

• The company may be liable for any business driving and may need its own non-owned auto insurance policy for protection.

• Check whether there is coverage for car rentals.

Are cyber activities covered under your business owner’s policy?

If you have a BOP, does it provide protection for claims arising from actions through your website, Twitter, LinkedIn, Facebook, or other online activities? Your BOP may cover your website if you transact business there (i.e., you’re an e-commerce site); it may not if you merely use your site for informational purposes. You can still face exposure for copyright violations, defamation, and other legal actions.

Usually cyber liability coverage is an add-on to your BOP. However, not all BOPs offer this additional coverage; you may need a separate policy.

Does your BOP cover your for acts of terrorism or certain other events?

Floods, earthquakes, and acts of terrorism are generally not covered by a BOP. For example, under the Terrorism Risk Insurance Act of 2002, (which is set to run only through 2014), only businesses that purchase optional terrorism coverage are covered for losses arising from terrorist acts. However, insurers must offer the coverage; there is a federal “backstop” for losses covered by insurers (the federal government shares insurance companies’ losses).

You probably need a separate policy for flood protection (check commercial coverage from FloodSmart). For other events currently excluded from coverage under your policy, consider adding a rider. Of course, adding protection raises your premiums. Be sure to tailor additional coverage only for extreme situations by using a large deductible.

Bottom line

Don’t wait until a problem arises and you find that the insurance protection you expected isn’t there. Read the fine print in your policy or talk to your agent to make sure you have the coverage you think you have.