General rule of thumb is that personal contracts don’t like business exposures and business insurance contracts don’t like personal exposures. Having said that – you do need to know the specifics.
First we have to define what is a “business”. Insurance policies will take words that can have several meanings and have a definition page to clearly set out what the insurance contract is talking about. Standard definition found in Homeowners, Renters and Condo policies are:
“Business” – as defined in the standard Homeowners, Renters and Condo contracts – means:
1) A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; OR
2) Any other activity engaged in for money or other compensation, except the following:
a. One or more activities not described in (b) through (d) below, for which no “insured” receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;
b. Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;
c. Providing home day care services for which no compensation is received, other than the mutual exchange of such services; OR
d. The rendering of home day care services to a relative of an “insured”.
Note that no where in the definition does it say you had to make a profit – just simply did money exchange hands.
Now that we have defined what “Business” means – you will find a little coverage for business property at your house and NO coverage for a detached shed used in whole OR in part to store business items. Here are the sections:
SECTION I – PROPERTY COVERAGES
B – Coverage B – Other Structures
2) We do NOT cover:
b. Other structures rented or held for rental to any person
c. Other structures from which any “business” is conducted; OR
d. Other structures used to store “business” property…..
C – Coverage C – Personal Property
a.$200 on money….
h.$2,500 on property ON the “resident premises, used for “business” purposes.
i.$500 on property AWAY from the “resident premises” used primarly for “business”….
What about when a customer comes to the house and they slip and fall – doesn’t the homeowners liability protect?
SECTION II – LIABILITY EXCLUSION
E – Coverage E – Personal Liability and Coverage F – Medical Payments to Others DO NOT apply to the following:
a.“Bodily injury” or “property damage” arising out of OR in connection with a “business” conducted from an “insured location” OR engage in by an “insured, whether or not the “business” is owned or operated by an “insured” or employees an “insured”. This exclusion is not limited an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised , owed, or implied to be provided because of the nature of the “business”.
b.This Exclusion does NOT apply to:
i.The rental or holding for rental of an “insured location”
1.On an occasional basis if used only as a residence
ii.An “insured” under the age of 21 years involved n a part-time or occasional, self-employed “business” with no employees.
Not sure about your situation – contact us to discuss.
Reference: ISO HO 0003, Oct 2000 edition