Help with Home Busines and Insurance?

Question

I am living in a house owned by my father, which he has insured as a second home. I am starting a home business and am planning to register with the state next week as a sole proprietorship. I have looked into small business insurance, but my father is worried that running a business out of this house will cause his homeowners insurance to rise.

Any insight into this would be greatly appreciated.

Can the insurance compeny raise rates because I am running a business out of the house? What if the business itself is insured on a separate policy?

Answer 1

~~You need to give more info. What type of business? Will other people be working with you from your home? Will customers come into you home?  This all would make a huge difference on the answer versus a home business that is all on the internet for instance.~~

Answer 2

I talked to a friend of mine who is a certified to sell insurance and his sister is also my insurance agent and this is what I got:

Renters and homeowners policies do not cover home businesses. You will need business property insurance. As an example, if there is a fire or tornado that damages your home office, including your computer, fax machine, phone, desk, supplies, etc (anything that you use for your business) will not be covered by homeowners policy. A homeowners insurance policy and business insurance policy seperate the two as if your office and home where two different entities. Therefore although your office is in the house you live in, your business insurance policy will cover just the office and supplies needed to operate the business. The homeowners insurance policy covers the rest of the house. They are not affected by each other. Secondly, depending on what you plan on selling (whether it be a product or service) you may want to consider these additional insurance policies: liability insurance and product liability insurance.

Liability insurance covers your business for damages done to a person or property when they visit your office.

Product liability insurance covers your business for damages done to a person or property by means of your product or service.

The only way your homeowners insurance policy and business insurance policy can have anything to do with each other is if you add endorsements. Better explained here: http://www.hometownquotes.com/home-based...

Lastly, you may also want to look into something called Acts coverage (not sure of your entire situation). I don't know much about it besides it's a gap coverage type policy. When I looked it up I took this from it: "it secures coverage that will be in place the moment the prior coverage lapses." However I think this is only needed if you currently have this business outside of your home and are making it into a home business. If you are starting the company for the first time, I don't believe this is needed.

Answer 3

There is more than one issue here.  Does your father LIVE in the house as a secondary home?  If not, it is nonowner occupied (even if a relative is living in it) & no longer qualifies for a homeowners policy, it needs to be on a dwelling fire policy.  Then, you will also need to purchase a tenants policy to have coverage for your personal contents & personal liability.  It is also going to make a difference if the business is in the house itself or a detached structure.  If it is in a detached structure, there is absolutely NO coverage on your father's homeowners policy the second your business goes in there.  That is an exclusion on the policy form.

You absolutely need to purchase a business policy on your business, however, you will need to tell your tenants insurance company about the business.  Most of the time, insurance companies want both the personal & business policies with the same company when they are at the same location because that way, there is no argument between different companies if there is a covered loss if it was business related or personal.  It may also be required that your father's dwelling fire policy be with the same company also.  You will both need to find a company that writes your type of business (not all companies write all types of businesses) and personal insurance.  Depending on your business, your father may need to purchase a commercial fire policy.

The only person that would be able to answer this properly is an agent in your area that writes both personal & commercial insurance.  He or she will ask the necessary questions to properly cover you, your business & your father's house.  It would be best to speak to an independent agent since they would have several companies to chose from to coordinate all of your insurance.

Good luck on your new venture.

Answer 4

One of my friends asked me this kind of questions before,I found helpful here.http://insurance.online-frees.info/insur...