Homeowners Insurance and selling made items


#1

I’ve seen a lot of posts in general about people planning to make a multitude of items and sell them.

It may have been a recent Wood Magazine where they brought up an interesting point… A guy’s shop/garage burned down due to an electrical issue. When it came time for him to make the insurance claim one way or another the Insurance Company found out that he was using his tools for a business. As a result… his home owners insurance did not cover the damage to the tools and some other things.

I am sure a lot of this depends on what you have your personal property limits set to and whatnot… but just some food for thought as people start to install a machine that uses a beam of light to cut solid objects. =) As a hobbyist… I am sure homeowners wouldn’t bat an eye… if you start selling things at a decent volume… you could run afoul of your policies. Something that may be worth asking your Insurance Agent if there is any doubt and you plan to sell items.


#2

You can also get some form of business insurance. If you’re running a business, it’s probably worth at least looking into it.


#3

I have a specific home insurance that takes into account that I am running a business from home. I have separate business insurance to cover the business machines, stock, etc

You MUST let your insurer know if you are running a home business - in my case the level of stock I hold affected the policy as, even though it is insured separately - it apparently might make the house more tempting to burgle…


#4

Correct… you CAN get the business insurance or you can beef up your existing policy to cover. My point was… a lot of people don’t think about this portion of things when they start making items for selling. I know it wasn’t something I ever really thought about until I had read the article. On a level of 1 to Suck I think it would suck pretty bad to have something like that happen to only find out you didn’t have enough coverage.


#5

Good food for thought.


#6

Good idea. Something to look into.


#7

Any time you buy an expensive piece of equipment, you should go over your insurance policy to make sure it is included. You may have to declare it, or you may want to add additional coverage if you are near the max of insured belonging value. For something like a laser cutter (or a table saw… or a trebuchet) you should inquire directly with your agent, and possibly add additional coverage or a power-tool rider/equivalent. Besides the risk of fire, smoke, and deadly fumes, you may also have to contend with the risk of exposure, if you have ordered the pro.
And… not to spoil anyone’s plans and dreams… If you are planning on running a legitimate home business, but have not started it up yet, be sure to look into all the legal aspects, including insurance. I can’t speak for other parts of the country, or other countries, but for where i am in california you would also need a business license, tax reporting, and home occupancy permit (at the very least) to run a legit home business. It’s scarier than it sounds, but it is not as simple as just staying home and posting stuff to etsy (although some people seem to get away with doing just that)


#8

The one thing I haven’t seen mentioned is if you rent, at least in the US, you need renter’s insurance. Generally speaking, your landlord is only insuring the building not what is in it. If you’re renting without renters insurance and you’re burgled, a pipe bursts or the people below you start a fire and all your stuff is smoke damaged and/or water logged or god forbid the whole place burns down or is scattered to the winds by a tornado the best you can hope for are some sympathy rounds at the bar.

Anything you own with a comma in the price tag, take a picture of it, preferably a picture of it and a second picture with a closeup of a serial number or model number, and upload it to the cloud. This will at least give you a better negotiating position when the insurance company decides you owned exactly $32.15 worth of stuff. For jewelry, firearms, specialty electronics, power tools, and any purchased artwork to name what I know of you may need a separate rider (but it shouldn’t be much if anything, unless you own a lot of it.) As regards business insurance, I think the question is how large is your business? A glowforge and $500 of stock? Even if the insurance company finds your Etsy shop, it’s probably not worth their time to argue if that’s all you’re claiming (plus your $32.15 of household goods.) If you’re claiming $50k in equipment and an equal amount in materials…“well that is quite a hobby you have there sir. Are you sure it’s not an unclaimed business?” But yeah, you should have business insurance and a seller’s permit long before you get to that point.


Using the GF in an apartment?
#9

Actually, if you are running a business, biz insurance is a MUST. Insurance is required to cover inventory, consumables and equipment. If the house (under just the homeowner’s policy) burns down due to something related to your business (not covered in the homeowner’s policy) your claim will be denied.