Many people run small businesses out of their home; are they covered by homeowners insurance?
Business means a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis. This definition is very broad and basically ropes in all types of jobs.
Business Defined – Exceptions
-Money received is less than $2,000 for the 12 months prior to policy period
-Mutual (nonpaid) day care services
-Daycare services rendered to a relative of an “insured” whether paid or not
Bodily injury or property damage arising out of or in connection with a business conducted from an insured location or engaged in by an insured individual, whether or not the business is owned or operated by an insured individual or employs an insured individual. This exclusion is not limited to an act or omission.
Business Exclusion – Exceptions:
-Renting or holding for rental an “insured location”
-Rented as a residence on an occasional basis
-Rented in part only as a residence, such as renting a room in the residence
-Rented in part, as an office, school, studio, or private garage
-An “insured” under 21 years old involved in a “business” with no employees (i.e. paper route, lawn service)
Some insurance companies allow you to add a business endorsement to your home based business. These typically cover business property, business income, extra expense, personal liability, and medical payments coverage. Talk to your insurance agent for more information on business endorsements and to see if it’s something that applies to your own situation.
Nearly all business related practices are not covered by your homeowners insurance policy and require a separate Business Owners Policy or Business Endorsement where applicable. Speak with your agent to find out what’s best for you if you’re running a small home based business or thinking about doing so.
AZ Insurance Team
*All home insurance policies are a little different and this may not be applicable to your home insurance policy, talk to your agent to see what your home policy covers.