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Personal Insurance: Home Insurance

Exclusions

Business Use - Is business property covered by my policy?

For a home-based business you may have a variety of items like office furniture, file cabinets, computers, tools, equipment, supplies, stock and inventory. Rather than exclude personal property used in business, the typical Homeowners insurance policy limits the amount of coverage provided.

SECTION I - PROPERTY COVERAGES
C. COVERAGE C - Personal Property
3. Special Limits of Liability - These special limits do not increase the Coverage C limit of liability. The special limit for each category below is the total limit for each loss for all property in that category.
h. $2500 on property, on the “residence premises”, used mainly for “business” purposes.

4. Property Not Covered - We do not cover:
i. “Business” data, including such data stored in:
1) Books of account, drawings or other paper records; or
2) Computers and related equipment.

EXPLANATION:
C.3.h. limits personal property used mainly for business purposes to $2,500. This limit can be raised by endorsement for a small additional premium. Quite often many personal property items that are used in business may also be used personally (like mechanics tools and power tools). It becomes a difficult matter to adjust claims on this type of property. The phrase “used mainly for business" becomes the deciding factor. It would be wise to increase the limit on personal property used in business to remove all uncertainty of how a loss would be adjusted.

C.4.i. removes any coverage for “Business” data. So, although your computer and file cabinets themselves can be covered items, the data and records for any business are not covered by the policy.

Homeowners policy references are from the unendorsed ISO HO-3 Special Form policy, 01-00 edition. Policy language may vary somewhat from company to company and state to state. Read your policy.

For a list of related questions click:
Does my Homeowners policy exclude business activities?

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