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Report: Most home business owners underinsured

Posted On Sun, August 26, 2012

According to a recent survey done by the Independent Insurance Agents & Brokers of America (IIABA), a surprising amount of home business owners are uninsured or underinsured.

The National Bureau of Labor Statistics reports that three out of 10 American homeowners run businesses out of their homes. Unfortunately, according to the IIABA, 60 percent of these small business owners do not know that a standard homeowners insurance policy does not cover the majority of home business assets.

Forty percent of home business owners surveyed were under the impression that their business was insured under their homeowners insurance policy.

According to the Rocky Mountain Insurance Information Association (RMIIA), most homeowners insurance policies only cover damages up to $2,500 on the home premises, and $250.00 off the premises.

In fact, the IIABA reports that uninsured home businesses are 2 percent more likely to incur financial losses than those that are completely covered.

Madelyn Flannagan, vice president of IIABA, states that a commercial insurance policy must be purchased alongside homeowners insurance in order for home business owners to be completely covered. According to Flannagan, commercial insurance rates for home businesses can be as low as $250 per year.

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