Wednesday, April 8, 2009

"I don't need insurance, for my home based Homeowners Insurance covers me, right?"


Sadly the above statement is a common misconception by most insured’s, or should I say uninsured’s, who have a business they operate out of their home. In today's economic climate, with massive layoffs and corporate downsizing, many individuals are turning to self-employment as a means to earn a living. This brings in new challenges for them, including insurance exposures.

Since each homeowners policy is unique, the following are general statements about the possible coverage problems faced by a business operating out of a home.

  1. The standard Homeowners policy provides, in general, NO LIABILITY coverage for any business activities

  2. The standard Homeowners policy provides very limited coverage, usually up to only $2,500 for business personal property while ON the premises. OFF premises exposures are even more limited

  3. If the business is operated out of another structure on the premises, the other structure is not covered on the standard Homeowners policy

  4. The definition of and "INSURED" in the standard Homeowners policy does not include corporations, non-resident “partners”, or employees thus there is no coverage.

  5. You may be able to add by endorsement certain “incidental business” activities to your policy. However, the coverage is very restrictive and usually limited to ON premises activities, virtually no OFF premises activities are covered.

  6. The standard Homeowners policy does not provide any coverage for professional liability. This is especially troubling as many in-home businesses are of a professional or service type nature providing consultation and/or professional advice to thier client. Therefore there is no coverage for these activities.

  7. There is no coverage for business income on the homeowners policy.

  8. Other coverages to be considered are potential Automobile Liability exposures if personal vehicles are used routinely in the course of the business operation and Workers Compensation if you have your own employees.

  9. Your Homeowners Insurance Carrier has a right to know what you are doing and you have a duty to keep them informed. Failure to disclose the business exposure could jeopardize the personal coverage as well.

The bottom line is there are large and ominous coverage gaps facing individuals operating ANY type of business out of their home. The business should be treated as any other regardless of where it is operated.


Start with a detailed conversation with your independent insurance agent. Many coverage options are at your disposal and surprisingly affordable. Many insurance companies specialize in writing small packages which bundle together necessary general liability and property coverages to protect these In-Home operations.

As with anything communication is key. By lettting your agent know what your plans are ahead of time, you can avoid an expensive uninsured loss.


  1. “Communication is key.”—I agree with your statement, Jamie. Everything becomes clear with good communication. And if I may add, it is better to do a wide research about the coverage options for better understanding when you discuss your plan before the agent.

    Cayla Dupont

  2. Having a home based business insurance is a smart thing to do. Being self employed, the security of your source of income lies on your hands. Not having to insure your business is basically like neglecting your responsibilities right?

  3. Thanks for explaining the coverage of home insurance, most of the insurance company does not include insurance for home based business. For detail information we should ask the insurance adviser about coverage plan.

  4. I will prefer this blog because it has much more informative stuff.legalliability

  5. I have already been exploring for a bit for any high quality articles or blog posts on this sort of place . Looking at in Bing I at last came across this web site. Reading this info So i’m happy to convey that I have a really good uncanny feeling I came across just what I needed. I most certainly will make certain to don’t forget this website and give it a look on a constant basis. Cheap life insurance in Houston

  6. All three participants found the listening session valuable. “It was educational hearing other farmers and ranchers,” noted Streit. “This was a great group with diverse opinions about Montana agriculture. I certainly learned much, and feel humbled to have served on that panel. See at more

  7. It is tempting for businesses seeking to reduce their costs to deliberately underinsure their businesses. life insurance agent

  8. written content. I added new knowledge to my database for essay writing skill.โรงแรมแมว กรุงเทพ

  9. Nothing enamors like the lights of NYC. Brooklyn Effects(TM) has made a module for Polished product Star X giving flashes and light holes adding enthusiasm to all recording. Is there the light choices, as well as advances for FCPX to easily change starting with one clasp then onto the next. FCPX Effects

  10. It is really a helpful blog to find some different source to add my knowledge. I came into aware of new professional blog and I am impressed with suggestions of author. Full Cover Insurance California

  11. Home insurance plays an important role for the safety of the people. .Compass Claims is a big insurance company which is providing quality insurance services.

  12. I am definitely enjoying your website. You definitely have some great insight and great stories.
    Company formation in Malaysia

  13. Among one of the finest pieces on the web, refreshing in its specificity.
    online bookkeeping

  14. Thank you very much for the sharing! COOL..
    john faraday