Insuring a Business on your Residential Property

Homeowner's insurance may not cover you if you build a shop on your property, or even work out of your garage. In this thread, business owners consider insurance strategies. November 11, 2005

I am looking for any recommendations on an insurance company in CT. I have a business based out of a separate building on my property. For a short time, I had no coverage; my shop was listed as storage. I made an inquiry this morning to start a business policy and my current insurance company does not cover woodworking shops and will not renew my policy because there is a grey area between my homeowners and business. I have some time before my policy runs out but need some input. Any help would be greatly appreciated.

Forum Responses
(Business and Management Forum)
From contributor R:
Nationwide has a sub-company called Tapco Underwriters that insures the type of business you have. Pennsylvania Lumberman's is another one as well.

From contributor T:
I was in a similar situation when I started my shop. I built a 40 x 60 shop on the same property as my home. The second that I got a business license and set up shop my home owners policy would no longer cover the structure or its contents. Since I already had Nationwide as a carrier for my home and automobiles I contacted them. To my delight, they were able to write me a business policy that covered the shop building and all of its contents, supplies, and equipment. The policy also included a million dollars worth of liability insurance, all for less than $1,400 a year. It’s worth every penny for the peace of mind it gives me.

This is something that I don't think a lot of people realize. If your operating your business out of a basement or garage and something happens like a fire, your homeowner’s insurance most likely won't cover the damage if they find out that you are operating a business out of that space.

From contributor A:
That is the typical response with Homeowner’s insurance. Contact your insurance company that provides your Liability (if you have any). They will usually upgrade the standard contractor's package to include your building and contents and location is irrelevant. Do not expect to save any money by insuring a building on your own residential property.

From the original questioner:
I knew before I made the call to "upgrade" and become legit that I was basically running without insurance. I understand the insurance company is a business and like all of us trying to make money and not pay out. I was told by several brokers that if there is the smallest loophole for them not to pay a claim they will jump on it. Now everything is out in the open and I received an estimate today that did not make my jaw drop.