An Unpleasant Business Surprise

If you run a business in your home, you may be surprised to find that a typical homeowners policy is NOT designed to insure it. Standard homeowner policies don't provide coverage because they're meant to cover exposures to losses that are personal in nature. The premiums collected for basic homeowners policies are determined assuming that any losses will be the result of owning a particular home or from the various personal activities of the homeowner.

While some very limited coverage does exist for some instances that involve modest amounts of business personal property or landlord's property; if a business exists at your personal residence, you need to be aware of the many holes in your protection.

Gaps In Your Coverage

An in-home business is not adequately protected by a basic homeowners policy under either its property nor liability sections. Here are some areas where coverage is lacking.

Property Coverage Gaps

A typical homeowners policy does not protect an in-home business operation from:

• damage to business property that belongs to others but that is in your care or custody;
• damage to a detached garage, barn, or other structure on your residence premises if the structure is being used in whole or in part for business; or
• theft loss for landlord furnishings if part of your residence is rented to others.

You should also know that there is no defense coverage if you are sued over business related activities.

Modifying A Standard Policy

If you have a really minor in-home business exposure; it may make sense to add an endorsement or two to your homeowners policy. Depending upon your company, you can add additional coverage for a variety of situations. Small operations which can be handled quite well by this method include daycare, hobby farming (with minor machinery and livestock), professional offices, rental of condos or other structures, studios, teachers (even sometimes to cover corporal punishment exposure) and certain instances involving business property.

How then do I insure my business?

In-home business operators commonly must consider:

• workers compensation for ANY employees;
• business automobile insurance for delivery vehicles and trucks (including larger pickups);
• and liability coverage under a commercial auto or general liability policy for liability and physical damage coverage for mobile or contracting equipment.

Please see the companion articles for more information on the types of coverage you may need for the listed type of in-home business.

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