My Studio is Covered by My Homeowner’s Policy

Sept 29, 2016 | Tip of the Month

Furniture Maker + Beneficiary Michael Puryear

The same policy that would cover your studio and its contents if you had a hobby no longer covers it if you use it for business purposes. You are in business if you offer goods or services for sale. It does not matter if you have a business license, either. A web site is enough proof for the insurance adjusters.
Most homeowner’s insurance policies exclude coverage of detached or “accessory” structures if they are used for business purposes.
Even scarier is the fact that the same exclusion applies to liability insurance. If someone slips and falls during a holiday tour, or a delivery person trips over something while picking up a gallery shipment, you are on your own. Eek!
Both a homeowners policy and business insurance policy typically exclude damage from flooding and earthquakes.

Good: Get an in-home business rider for your homeowner’s policy. Be sure it covers your building if you own one and has adequate liability coverage.
Better: Get a separate Business Owner’s Policy (BOP).This will typically cover your business personal property, and provide better liability coverage than an in-home business rider. It may also have some coverage for items in shipment or away from the studio, and lost income.
Best: If you own a studio building, whether or not it is on the same property as your home, purchase a commercial insurance plan that covers the building, its contents, liability, and items taken away from the studio.
Plus: Assess your risk for other excluded losses such as earthquake and flood, and purchase appropriate insurance.