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Recession refugees who turn to a home-based business to make ends meet threaten their livelihood if they aren't properly insured.

Homeowner policies limit coverage for work-at-home ventures and that can include coverage for buildings where the business is housed; office equipment or business property; and legal liability that may arise out of a lawsuit generated by the home-based job.

The Small Business Administration says nearly half of all U.S. businesses are home-based and more than 20,000 gross more than $1 million annually. Too many have put that income at risk.

A national survey by the Independent Insurance Agents & Brokers of America says 58 percent of the 24 million home-based businesses have no business insurance.

Almost 40 percent of surveyed home-based business owners thought that their homeowner policy would cover their small company, and more than 10 percent of those without business insurance experienced a loss.

"Many home-based business owners think they're too small to need a business insurance policy," said Candysse Miller, executive director of the Insurance Information Network of California (IINC).

"But in the real world, lawsuits don't discriminate. Whether you're big or small, your business suffers," she added.

Most

homeowner's policies cover only $1,000 to $2,500 for business equipment and offer no liability protection or loss of income coverage.

What are the options?

IINC says:

• For as low as $14 a year, business-owners can increase their standard homeowner's policy limits. This can be a good choice for people who don't have exposure to liability, who do not store business inventory and who do not rely solely on their income for survival and have inexpensive business equipment.

• A full home office policy is the next step up. Home office policies cover business liability and replacement of lost income, as well as homeowners coverages such as fire, theft and personal liability.

• You can also buy several individual business insurance policies to provide the various coverages you need, such as business property, general liability and business income insurance.

• You may also need special policies for business use of your car, health insurance, injured workers compensation. An umbrella policy may also be necessary to offer extra liability insurance that pays or a loss when the limits of your underlying policy are reached.

Discuss home-based business insurance with your insurance agent for more details and then shop around for the best deal. A few calls can save you money.

Get proposals for the coverage you need from at least three different agents.

Compare the proposals, prices and your impressions of the agents. Don't forget to ask about discounts available to owners of businesses with fire detectors or security systems.

Update your policy as your business grows.

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