Do You Operate An In-Home Business

If you do, be aware that a typical homeowners policy is NOT designed to insure many in-home businesses. The premium that is charged for homeowners coverage assumes that the insurance protection is for one- or two-family residences and related buildings and structures which contain personal property and are used accordingly. Therefore, a homeowners policy won't provide:

• Liability coverage for customer slips and falls.
• Property damage coverage to business property you own or that is in your care or custody.
• Products Liability (for things you make).
• Professional liability (for services you promote or provide).
• Personal injury liability (libel, slander, false arrest, wrongful eviction).

• Defense coverage if you are sued for business activities.

What About Coverages For My Employees Or "Other Structures"?

Generally, a standard homeowners policy does not provide workers compensation coverage for any employee who is required or has the option to be covered under a workers compensation law. Medical expense and premises liability coverage is provided for residence employees (maids, butlers, nannies, etc.) who are ineligible for coverage under a workers compensation law, but only while the employee is performing residential tasks.

Example: You send your nanny to make copies of your business proposal and, on the way to the copy center, she is seriously injured in a fall. The homeowners policy will not provide any medical expense coverage for your nanny because she was performing a business-related chore.

There is no coverage for detached garages, barn, or similar "other structures" on your residence premises if they are used in whole or part for business.

Example: You store $3,000 worth of equipment and supplies that you use in your job in your garage and the garage burns down. The fire loss to the garage becomes ineligible because of its partial business use.

What IS Covered By A Homeowners Policy?

Generally a homeowners policy does provide limited coverage for business-related exposures. One commonly used policy offers the following:

• $2,500 coverage limit for business personal property kept at the residence premises.
• $250 coverage limit for business personal property kept away from the residence premises.
• $2,500 for landlord's furnishings at the residence premises while in apartments rented to others. (The coverage doesn't include theft and other specified causes of loss.)

One option for improving your coverage for an in-home business is to add endorsements which may do the following:

• Increase the coverage limits for business personal property.
• Cover garages and other buildings that are rented to others.
• Cover electronic business equipment that can be used in a vehicle while this equipment is AWAY from a vehicle.
• Provide limited theft coverage for landlord's property.
• Cover up to $2,500 of personal property for a daycare operated in a home including limited liability coverage.
• Cover condominium unit owners' liability for damage caused by renters.
• Provide premises liability coverage (i.e. slips and falls by customers).
• Provide limited liability coverage for very small farms (hobby farmers).

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