Home-Based Business – Are you covered? 
July, 21 2017, ,
Posted by Administrator
There are a large number of people that earn their income outside of the typical 8-5 job. The home-based business persons take advantage of the comforts and flexibility of working from their own home to make their living. Whether they are selling merchandise that is made available through a wholesaler or they have their own workshop and sell their homemade crafts, there is a large exposure for the products and also the income that is generated by the business. If the products are stolen or lost in a storm or the computer system is down and they are not able to promote your business that means money and livelihood are on the line. Many of these people might be relying on their homeowners’ insurance policy to cover their business and business property in the event that there is a claim. However, on an unendorsed policy there are limitations or possibly no coverage for the business exposures.

Take the following scenarios:

Policyholder is retired and has a small engine repair shop in their outbuilding as a way to keep busy. They do not do a lot of work, but they have spare parts, customers’ property, and also have customers in and out of the property to get their equipment worked on. One day a customer comes on the property and when they are leaving they trip on an extension cord in the shop and fall and break their arm. An unendorsed ISO HO3 policy has exclusion for Personal Liability and Medical Payment arising out of or in connection with a business conducted from an insured location.

Policyholder has a building on their property where they work on wood working projects that they sell at local craft fairs and through word of mouth advertising. A tornado hits the area and destroys the building. On an unendorsed ISO HO3 policy, Coverage B – Other structures – does not provide coverage for other structures that are used in whole or in part for business.

Take the above scenario and figure in the business personal property, the products that are intended to be sold. On an unendorsed ISO HO3 policy under Coverage C – Personal Property – there is a sub-limit that is applied to property on the residence premises used mainly for business purposes.

While these are just a few basic examples of likely business scenarios and how your homeowners insurance policy can exclude coverage, there may be other exposures that can properly be addressed and covered by a separate business policy. The intent of the homeowners’ policy is to provide coverage for personal exposures. If you do have a home-based business, talk with your insurance agent to ensure that you will not be left uncovered and angry should a loss occur and you were not properly covered.

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