Filling the Personal Property Coverage Gap for Home Businesses
The number of businesses being run out of the household has skyrocketed over the past decade. In fact, recent statistics from Women for Hire indicate that a new home-based business starts every 11 seconds.
Home-based businesses typically begin as hobbies that eventually transition into income opportunities. Some of these home-based businesses include photographers, costume jewelry sellers and beauty/cosmetic consultants.
The majority of these new business owners assume that coverage is automatically provided through their homeowners policy. According to Digital Media Law Project, business pursuits are defined as a “continual or recurring activity that produces a financial gain” under a homeowners policy. New business owners might be shocked to learn that business pursuits are excluded on an unendorsed homeowners policy. There is an option to add a business pursuits endorsement to a homeowners policy; however, the limitation with this endorsement lies within the business personal property coverage.
The business pursuits endorsement on a homeowners policy only provides some coverage for business personal property. This endorsement offers $2,500 of business personal property on-premises and $250 off-premises. On the other hand, the USLI Home Based Business product was specifically designed to cover the unique exposures of a home-based business. This product provides up to $100,000 business personal property on-premises and up to $15,000 off-premises.
Imagine your client just started working out of his home as a wedding photographer. Now that it’s summer and the weather is beautiful, the photographer is spending many weekends taking engagement photos at the local park. What happens if he accidentally drops and breaks his new, expensive camera? Let’s hope this individual is not relying on his homeowners policy for coverage!
Based on the wording in a homeowners policy, the camera was being used for a business purpose, and, therefore, is considered business personal property. The truth is that $250 is most likely nowhere close to covering the cost to replace this photographer’s camera.
Like a photographer, individuals who sell costume jewelry or cosmetics also have their own assets that might not be properly covered by their homeowners policy. What if someone steals several necklaces at the local craft show? Similarly, what if all of the beauty consultant’s products are destroyed by a fire at the home?
In both instances, these individuals may not be able to rely on their homeowners policy for coverage since the business personal property limit would be insufficient to cover the losses. Not only would our Home Based Business policy extend coverage to these types of losses, it would also give your clients the “peace of mind” that they need.
Our product offers over 150 eligible classes of business, including DJs, wedding planners, crafters, bakers, teachers/tutors and fitness instructors. If you’re looking to fill the gaps in your client’s current coverage, we can help!
To help outline some of the common differences between a standard homeowners policy and a Home Based Business policy with USLI, please refer to the following chart:
|Homeowners Policy||USLI Home Based Business Policy|
|Type of Applicant||Insured working from home
for an employer or
|Insured working from home
for his/her own business
|Business Personal Property||$2,500 on-premises,
|Up to $100,000 on-premises,
up to $15,000 off-premises
|Limits up to $1 million/
|Equipment Breakdown Coverage||Not Available||Included|
|Professional Errors & Omissions||Not Available||$25,000 at no additional charge*|
*Applicable to most eligible classes
As always, thank you for your support and business.
Written by Danielle Conner
June 9, 2016
Contact Matt McShane,
Home Based Business Product Leader | 888-523-5545 Ext. 2142