While the economy continues to struggle, more families are looking for ways to supplement their incomes. Some start home based businesses selling everything from cosmetics to energy drinks to vitamin supplements without thinking about the insurance implications.
The term "business" is specifically defined in the Insurance Services Office (ISO) Homeowners Form and includes "any trade, profession or occupation engaged in on a full-time, part-time or occasional basis". It also includes any other activity engaged in for money or other compensation. There is an exception for activities for which no insured received more than $2,000 in total compensation during the 12 months prior to the policy inception.
The property section limits coverage to $2,500 for property used for "business" purposes. This includes inventory and samples stored at the residence and any other equipment used to support the business.
The personal liability section excludes ALL business activities (except the occasional rental of all or part of an insured location as a residence or part of an insured location for use as an office, school, studio or private garage). There is also coverage for someone under 21 self-employed in a part-time business. Samples of this could include babysitting or mowing lawns for family members (if they have no employees).
There are endorsements that will address the exposure. Business property can be increased by endorsement. A more comprehensive solution is the Home Business Coverage Endorsement or similar stand alone product. These forms address not only the property and liability exposure, but also add coverage for loss of business income.
Call Shelly at Ben Goodwyn Agency for more information 972.618.0100 shelly@bengoodwynagency.com
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