DEAR MR. MYERS: I operate a home-based business, and use part of my garage to store my supplies and finished inventory. If these items were stolen or destroyed by a fire, would my losses be covered by my standard homeowners insurance policy?
ANSWER: Probably not. Most conventional homeowners policies, known in the industry as HO-3s, either don’t provide coverage for business-related property that’s kept in a home or, at best, offer extremely limited protection.
Talk to your insurer’s representative to determine your current policy’s limits and exclusions. The rep might suggest that you purchase a separate business owners policy, or BOP, for your home-based enterprise.
A typical BOP would provide coverage for the portion of your home that’s used for business purposes, as well as for your materials and merchandise. It also may provide liability protection if, say, a FedEx driver slips and breaks a leg on your porch while making a routine business-related delivery.
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Many BOPs also include business-interruption coverage, which covers the loss of income if a fire or other disaster disrupts your operations. Some even cover the cost of renting a temporary workplace or storage space while needed repairs are made.
Assuming that you use the car you keep in the garage for business purposes, you also might need to purchase a separate business auto insurance policy.
REAL ESTATE TRIVIA: There are about 38 million home-based businesses in the U.S. today, according to a report by Incfile.com., a company that helps entrepreneurs and small businesses get started. Combined, they generate about $427 billion a year in revenue.
DEAR MR. MYERS: What are your household buying tips for June?
ANSWER: Prices for both large and small household tools will be among their lowest of the year as Father’s Day approaches on June 17. Millions of high-schoolers and college students also are graduating this month and will soon be striking out on their own, so retailers are already offering deep discounts on cookware, tableware and small kitchen gadgets to help them outfit their new digs. Ditto for many types of indoor furniture, especially smaller items such as end tables and lamps.
Most manufacturers trot out their new lines of vacuum cleaners in June, so retailers already have started marking down prices on last year’s models. Consumer Reports magazine adds that prices for in-home exercise equipment, such as treadmills and ellipticals, also will be near the lowest of the year.
One more tip: If you’re the type of shopper who occasionally visits second-hand stores operated by the likes of The Salvation Army or Goodwill, you’ll probably find a larger selection of merchandise than usual, because their inventories have been swollen by all the gently used items donated by the folks who have already finished their annual spring cleaning.
DEAR MR. MYERS: I have an outstanding credit history, but my fiancee’s credit is lousy. We want to eventually buy a home, but my mother says that when we marry, our credit histories will be merged and I will “inherit” his bad score and become liable for the roughly $15,000 he owes in unpaid debt. Is this true?
ANSWER: No, it’s not true. But while getting married won’t cause your sterling record to be combined with your new husband’s, it does not mean that his poor credit won’t affect the ability of the two of you to get a mortgage or other type of credit in the future.
Each of you always will have separate credit histories, even after you exchange wedding vows. But, if you apply for a post-wedding home loan or other credit jointly, the lender will consider both of your histories when making its decision whether to approve or reject the application. That means that his blemished record could require the two of you to pay a higher interest rate or larger fees for a loan, assuming that you can get one at all.
You may be able to avoid such problems if you personally make enough money to qualify for a loan by yourself, because then only your excellent credit score would be considered by the bank. If you apply for a mortgage in your name only and are approved, you always could add your new husband’s name to the title to the home after the sale closes – although you alone would legally remain responsible for making the payments, even though your spouse would own half of the house.
David W. Myers’ column is distributed by Cowles Syndicate Inc.