I Operate a Business From My Home. How Do I Insure the Business?

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The standard homeowners policies that are available in most states are NOT designed to insure many in-home businesses.

See-Which Homeowners Policy is Right for Me? for information on which homeowners policy is appropriate for your lifestyle.

The standard homeowners policy doesn't provide:

• Liability coverage for customer slips and falls.
• Property damage to business property that belongs to others but that is in your care or custody.
• Products or professional liability.
• Personal injury liability (libel, slander, false arrest, wrongful eviction).
• Because there is no liability coverage for business related activities, there is no defense coverage if you are sued.

The standard homeowners policy also DOESN'T PROVIDE workers' compensation coverage for any employee who can optionally be or must be covered by any workers compensation law.

Medical expense and premises liability coverage is provided for residence employees (maids, butlers, nannies etc.) who are not eligible for coverage under a workers compensation law, but only while the residence employee is performing residence tasks, not business tasks.

For example: You ask your nanny to go to the local photocopy store to make copies of your business proposal. Your nanny is seriously injured in a fall. The homeowners policy will not provide any medical expense coverage for your nanny because your nanny was performing business and not residence related chores.

There is no building coverage to another structures (detached garage, barn, outbuilding) on your residence premises if the other structure is being used in whole or part for business.

Example: You store a few supplies that you use in your occupation in your garage. There is no coverage to your garage if your garage burns down or suffers another covered cause of loss.

Insurance companies are just now beginning to recognize the need to provide coverage for in-home businesses. A few special policy forms have been recently introduced. As we learn more about these programs we will advise you about their availability. Until then, here are the most commonly available options:

What is covered under the standard homeowners forms?

• $2,500 coverage for your on premises business personal property against covered causes of loss.
• $250 coverage for your off premises business personal property against covered causes of loss. (There is no coverage for portable electronic equipment capable of being operated by a vehicle's electrical system while that equipment is AWAY from the vehicle.)
• $2,500 for landlord's furnishings on your residence premises while in apartments rented to others. There is no theft coverage for landlord furnishings, and the covered causes of loss are not as broad as for other personal property.

A number endorsements can improve coverage for in-home businesses:

• Increase on premises business personal property up to $10,000 and off premises business personal property up to $1,000.
• Coverage for garages and other buildings rented to others.
• Limited coverage for death of livestock that are killed on the roadways in collision with vehicles.
• Coverage for business electronic equipment capable of being operated by a vehicle while this equipment is AWAY from a vehicle.
• Limited theft coverage for theft of landlord property. Theft of landlord property by the tenant, the tenant's residential employee or members of the tenant's household are not covered.
• Coverage for the building, and/or other structure and $2,500 on premises personal property coverage for a business operated as a daycare. Premises liability protection is provided, but not for activities involving vehicles, draft or saddle animals, watercraft or aircraft. No workers compensation is provided. (Many companies do not offer this endorsement; and those that do will often attach corporal punishment and sexual and emotional abuse exclusions.)
• Condominium unit owners rented to others for damage to the condominium unit and premises liability for your negligence in maintaining the premises.
• Premises liability coverage (slips and falls by customers) for your residence and/or other on-premises structures, or even at other residences you own for businesses that are specifically described in your policy. (Most companies will cover only office type businesses.)
• Coverage for other structures on your residence premises while used in whole or part for business purposes.
• The business pursuits endorsement can cover corporal punishment by licensed teachers. (Many companies will not write this coverage.)
• Hobby farmers can convert their homeowners policy to include coverages usual to a farmowners policy. (Talk to your company. Some will not provide coverages; some will insure only certain size farms. A farm policy purchased from a farm specialty company may cost less than a homeowners policy with the farmers personal liability endorsement.)

How then do I insure my business?

All types of businesses will need to consider the following:

• Workers compensation for ANY employees.
• Business automobile insurance for delivery vehicles and trucks (including larger pickups).
• Bulldozers and other mobile or contracting equipment may be covered by a commercial automobile or general liability policy for bodily injury and property damage you cause. Which policy is appropriate depends upon how each piece of equipment is used.
• Physical damage coverage to the mobile or contracting equipment may be obtained through the commercial auto policy or a separate equipment physical damage form, again depending upon which policy will cover the equipment.
• An agent who specializes in contractors will know which policy(s) is appropriate for your mobile equipment.

Business types:

Select the type of in-home business you are currently considering operating to find out more about the forms of coverage you should consider:

Sales office:
Professional office:
Landlord:
Daycare or other in-home school:
Retail:
Wholesale:
Service:
Manufacturing:
Contracting:
Repair:
Farms and ranches:
Racing:

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