Should I Insure My Hobby?
A hobby is an activity a person does for fun or relaxation. If you have a hobby and you haven't thought about how it may affect your insurance needs, consider this an invitation to do so, immediately. There may be some aspect of the "fun" activity you do which should be thought through. Most hobbies involve a lot of personal time, but that's not an insurance concern. However, hobbies often require a large investment in tangible property and may even create some legal responsibility to other persons or their property. Hobbyists: Collectors and Activists Hobbies tend to involve either collectors or activists. A collector is more likely to be concerned with gathering property with a characteristic in which he or she has an intense interest. Examples include people who collect stamps, art, coins, autos, antiques (which is a world of its own), comic books, baskets, dishes, glassware, sports memorabilia, etc. The key is that the collection of the class of property is the primary goal of this type of hobbyist. An "activist" (this writer's term) is a person who may also collect a certain type of property. However, the activist's primary goal is to purchase the equipment necessary to participate in the activity. Note that there's a fine line between such a hobbyist and a sports enthusiast. Examples are hunters, musicians, painters, sculptors, cyclists, and enthusiasts of many types, such as fans of model or radio control planes, helicopters, etc. Activists often have an interest in special pieces of property, such as a guitarist who also owns a guitar used originally by Chuck Berry. However, their investment in special property has much more to do with acquiring property, including extra parts, that facilitate their interest. An example is a ham radio operator who has an extensive inventory of radio parts for building and maintaining the tools of his hobby. With collectors, the focus should be placed on the nature of the property being acquired. With activists, besides attention to the property exposure, there should be equal emphasis on the liability exposure that's inherent in their activity. Coverage Needs Created By Your Hobby Property Coverage - If you're spending the time to buy or trade for property that has special meaning, you should take a little more time to be sure that it's properly insured. Most homeowner policies may, at best, provide minimal protection for the types of property involved with most hobbies. Why? Items such as coins, stamps, antiques, guns, etc. are very vulnerable to loss, especially theft. Also, such property is very valuable in relation to its size. The value of collectibles kept in one room may be more valuable than all of the rest of your home's contents. Finally, even when collectible property is eligible for a policy's full coverage, that may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage. Liability Coverage - if your hobby is more hands-on, then you must be sure you're protected against any legal liability related to your activity. You may want to ask yourself the following:
Fortunately many aspects of a hobby, especially legal liability, are covered by a homeowners policy. However, your activity may need special or even business coverage. The way you spend your leisure time should be a diversion from your routine responsibilities. Don't let your enjoyment be interrupted by not being properly covered. Discuss your special interest with an insurance professional. An insurance professional has a special interest in making sure your coverage needs are met. |
Wholesale
As a wholesaler, you should not expect coverage under a homeowners policy. Here are some coverage options for your consideration: Businessowners Policy If you are a manufacturer's representative with limited inventory, some insurance companies will cover your business with the Businessowners policy, commonly called a BOP. The BOP provides broad coverage for the following:
If you have more than $1,000 of goods off premises in transit, you will need to add additional coverage. Coverage for goods stored at other locations must be added to the policy. Commercial Package Policy If you cannot qualify for a Businessowners policy, your agent will probably have to build a special commercial package policy to meet your needs. You will need a competent commercial lines agent to help you. Commercial lines agents have both the expertise to design the appropriate coverage and the markets for your wholesale business. Workers Compensation You will need workers compensation coverage for any employee - even part timers. Commercial Auto Policy You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup, or if the vehicle is owned by a corporation. |
Racing: Car, Boat, Motorcycle, RV, Truck, etc.
Racing Hobby or BusinessIf you are involved in racing vehicles or craft and, especially if you operate a business in building, servicing or repairing vehicles or craft from your home, you can not rely on your homeowners policy for either liability or property coverage. Coverage for damage to actual equipment that is raced is seldom covered. You will want to check with your agent or your racing association for coverage for shop equipment, portable tools, travel trailers and other equipment related to your racing hobby or business. You will also need liability coverage or, at a minimum, be sure that the racetrack has spectator liability coverage that applies to your race participation, including practices. Racing Repair Business Your business may need to be insured by an individually designed commercial package policy that includes appropriate coverage forms (endorsements) or a specialty form. Your protection may need to include coverage for the following:
It's critical to identify if you need coverage against products liability claims that can arise from customer property you have worked on at your business, which may be transit, located at another processor or at your customer's location. An Auto Garage liability policy may be necessary to handle any on-premises bodily injuries and a garagekeepers liability form can protect you against claims for damage to customer vehicles. You may need commercial automobile insurance if you make deliveries, if you have a commercial-size vehicle, or if the vehicle is owned by a corporation. If you have any exposure involving racing or repairing, it's important for you to discuss your situation in detail with an insurance professional. |
Farms and Ranches
The homeowners program can be endorsed to cover some aspects of hobby or "gentlemen" farms, including farm liability and livestock collision. Farming for profit will require a Farm or Ranchowners policy. Farm and Ranchowners forms can cover your dwelling, barns, sheds, silos, cribs and other buildings, machinery and equipment, supplies, liability coverage, additional living expenses after a fire or other covered cause of loss; some policies can be endorsed for livestock mortality. Crop insurance is a federal program, but local farm insurance specialists can provide crop hail and crop damage coverage. Your agent should help you design an insurance program that meets your specific needs. You may own property that previously was used as a farm. Farm insurers understand rural homesteads. You may find better protection from an agent and company who specializes in rural and farm property. If you have large barns or other outbuildings, you may need to increase other structures coverage under your homeowners insurance or convert coverage to a Farm or Ranchowners policy. If you lease land to others for grazing or crops or hunting, you will need to add separate liability coverage to your Home or Farmowners policy. Workers compensation laws for agricultural employees vary in each state. Each state has special rules for hired hands and migrant workers. Even if you are not required to carry workers compensation coverage for a specific employee, you may still be responsible for any-work related injury to that employee. Farm vehicles normally can be covered through a personal automobile policy. Incorporated farms may require a commercial automobile policy. |
Repair: Auto, Bicycle, Boat, Tractors, Furniture, etc.
Don't expect your homeowners policy to give you coverage.Repair businesses work on personal property belonging to others. Your business probably will need to be insured by the individually designed commercial package policy or similar specialty form. Coverage for inventory, repair machinery, property of others, business income coverage after a fire or other covered cause of loss, and premises and products liability coverage can be built into your policy. Look for a company that will write your size business. Make sure you consider the impact of products liability claims, coverage for goods that you are working on that belong to others whether at your business, in transit, at another processor or at your customer's location. You will need workers compensation coverage for any employee - even part timers. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup, or if the vehicle is owned by a corporation. Work on autos will require an Auto Garage liability policy for the on-premises bodily injury, and Garagekeepers liability coverage to protect you against claims for damage to customer vehicles. |
Contracting
Don't expect your homeowners policy to give you coverage.Many companies have excellent "artisan" insurance packages for the small to medium subcontractor. Ask your agent to show you different artisan packages so that you can choose a program that fits your needs. Coverages may be similar among artisan packages, but rating plans vary. Some companies charge rates based upon payroll, sales or number of employees. As your business grows, you will want to ask your agent to shop your coverage to see whether it is to your advantage to change from one rating formula to another. If you are a general contractor, you will need to work with an agent who specializes in general contractors. Contact your local builders association. Many builders associations will sponsor programs or know of agents who specialize in general contractors. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup or if the vehicle is owned by a corporation. |
Manufacturing
Don't expect your homeowners policy to give you coverage. Manufacturing businesses cannot normally be insured by a Businessowners policy. Find an agent and company that specializes in the kind of product you manufacture. Look for a company that will write your size business. Make sure you consider the impact of products liability claims, coverage for your products while they are in transit or at other processors, and products belonging to others that you are working on, whether at your business or at their location. You will need workers compensation coverage for any employee - even part timers. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup or if the vehicle is owned by a corporation. |
Service
Don't expect your homeowners policy to give you coverage.The following are the most commonly insured service classes of business by a Businessowners policy. The Businessowners policy provides broad coverages for buildings, personal property, loss of business income and extra expense incurred to remain in business (after a fire or other covered cause of loss), premises liability and medical payments. If you have more than $1,000 of goods off premises in transit, you will need to add additional coverage. Goods stored at other locations must be added to the policy. The following are the most commonly insured service classes of business by a Businessowners policy. If your service business is not on this list, it probably will need to be insured by the individually designed commercial package policy or similar specialty policy.
If you cannot qualify for a Businessowners policy, your agent will probably have to build a special commercial package policy to meet your needs. You will need a competent commercial lines agent to help you. Commercial lines agents have both the expertise to design the appropriate coverage and the markets for your service business. You will need workers compensation coverage for any employee- even part timers. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup or if the vehicle is owned by a corporation. |
Retail
Don't expect your homeowners policy to give you coverage. The Businessowners policy provides broad coverages for buildings, personal property, loss of business income and extra expenses incurred to remain in business (after a fire or other covered cause of loss), premises liability and medical payments. If you have more than $1,000 of goods in transit, you will need to add additional coverage. Goods stored at other locations must be added to the policy, normally as an additional location. You will need workers compensation coverage for any employee - even part timers. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup or if the vehicle is owned by a corporation. |
Daycare or Other In-Home Schools
Coverage for abuse or sexual assault for small schools is often difficult to obtain at a reasonable price. Limited corporal punishment coverage for teachers who are employed by a school system may be available from your homeowners carrier. If you are an independent tutor or run your own school, most homeowners policies cannot be modified to include corporal punishment. Abuse and corporal punishment may be available through the association(s) that specialize in your type of student. Your homeowners insurance will not help you for most schools operated in the home. Companies may be willing to add an endorsement to cover piano lessons, but most will not want to cover a three-to-five child daycare run from the home. Liability coverage may be purchased separately. Coverage for property and liability can be provided through a Businessowners policy, but none of these forms includes professional liability or abuse or corporal punishment. Specialty schools, such as ballet, sports, personal training, animal training, horseback riding will require specialty coverage. Again, your trade organization, or independent agent can often find you coverage at a reasonable price. Workers compensation is essential for any person you employ. Driving students in private vehicles or bus-like vehicles poses special problems. You must hold a Commercial Driver's license if you haul more than 16 people including the driver. Your school is probably too small to qualify for standard business auto insurance. If standard coverage is unavailable, many states have assigned risk pools and other mechanisms to provide you coverage-sometimes at reasonable prices. A good independent agent will understand these markets. Your state will also have laws regulating the transportation of students and these laws may require a special license when transporting fewer than 16 people. Subcontracting the driving does not lessen your responsibility for a whole raft of laws from vehicle accidents, workers compensation, ADA, and whether the driver has met the new substance abuse requirements. |
Landlord
The homeowners policy is designed to cover landlord occupied residential buildings, landlord owned personal property, loss of rents (after a fire or other covered cause of loss), premises liability and medical payments. Landlords who have multiple 1-4 family dwellings can find similar coverage in the dwelling insurance program. However, the dwelling insurance program will work only with properties that have four or fewer rental units. For landlords with residential property containing five or more to 60 units, the Businessowners policy is usually appropriate for insuring buildings, landlord personal property, loss of rents (after a fire or other covered cause of loss), premises liability and medical payments. Most Bed and Breakfasts do not qualify for coverage either in the homeowners or dwelling insurance program. Bed and Breakfasts will require a combination of tenants coverage for the resident owner/manager, and a Businessowners policy to cover buildings, landlord owned personal property in boarder's rooms, loss of business income (rents and fees) and the extra expense to operate (after a fire or other covered cause of loss), premises liability and medical payments. For landlords who have office or retail tenants, the Businessowners policy provides broad coverages for buildings, landlord personal property, loss of rents (after a fire or other covered cause of loss), premises liability and medical payments. Workers compensation is necessary for any employee. Talk with your agent. Most states require workers compensation for resident managers even if you provide only free lodging as payment. Make sure you have certificates of insurance for any subcontractors (painters, plumbers etc.) you hire to do work for you. If the subcontractor has no insurance, you may be responsible for the subcontractor's workers compensation related injuries. Most personal automobile insurance will insure cars, vans, and pickups used in business - business use, artisan use. Larger trucks, backhoes and other contractors' equipment will need separate coverage. Some contractor equipment can be covered by the Businessowners policy, some by an auto policy. Ask your agent how best to insure your equipment. |
Professional Offices
Doctors, attorneys, architects and others. Whether your home office is your only office or simply a satellite office, you will need to work with an insurance agent who is familiar with the coverages that are appropriate for professionals. Businessowners policies are suitable for most professional offices and can cover buildings, personal property, loss of business income, extra expenses incurred to operate the business (after a fire or other covered cause of loss), premises liability and medical payments. Consult with your agent or your professional association(s) for professional liability and errors and omissions coverage. |
Sales Office
Little Protection Offered By Homeowners CoverageDon't expect much business coverage from your homeowners policy. Usually a homeowners policy can be modified by adding an option to increase the protection for business property. However the available typically provides up to only $2,500 for personal property used for business and kept on the residence premises. Further, coverage often does not apply to business property that you are, storing as inventory, holding as a sample, or keeping until the property is delivered to a buyer. Such options also usually exclude business property related to a business conducted on the premises. For example, if you are a cosmetic sales rep (Mary Kay, Avon) and you keep inventory in storage, there is no coverage. If you are a day care provider, there is no coverage for cribs, high chairs, walkers, toys, etc. since the business is conducted on the premises. Options For Salespersons If you are a sales person operating out of your home and have limited inventory, some companies will cover you with the Businessowners policy. The Businessowners policy provides broad coverages for buildings, personal property, loss of business income and extra expense incurred to remain in business (after a fire or other covered cause of loss), premises liability and medical payments. If you have more than $1,000 of goods off premises in transit, you will need to add additional coverage. Goods stored at other locations must be added to the policy. If you cannot qualify for a Businessowners policy and a home business endorsement or separate policy fails to meet your need, your agent will probably have to build a special commercial package policy to handle your business. You will need a competent commercial lines agent to help you. Commercial lines agents have both the expertise to design the appropriate coverage and the markets for your sales business. You will need workers compensation coverage for any employee-even part timers. You may need commercial automobile insurance if you deliver anything or if your vehicle is larger than a car, van or small pickup. Another reason for buying a commercial auto policy is if any auto is corporately owned. |
What If I Run An In-Home Business?
Homeowner policies aren’t designed to insure in-home businesses. Homeowner premiums assume that the insurance protection is for a residence and related structures. Therefore no liability coverage is available for loss related to business activity such as:
Nearly as important, your insurer is also unlikely to defend you against claims involving a business. What About Coverages For My Employees Or "Other Structures"?Generally, a standard homeowner’s policy does not provide workers compensation coverage for any employee. Medical expense and liability coverage may be available for workers who are ineligible for workers compensation, such as maids, butlers, or nannies. However the coverage only applies while the employee is performing residential tasks. Example: You send your nanny to make copies of your business proposal and, on the way to the copy center, she is seriously injured in a fall. Your policy won’t provide any medical expense coverage for your nanny because she was performing a business-related chore. There is no coverage for detached garages, barn, or similar structures on your residence premises if they are used in whole or part for business. Example: You store $3,000 worth of equipment and supplies that you use in your job in your garage and the garage burns down. The fire loss to the garage becomes ineligible because of its partial business use. What IS Covered By A Homeowners Policy?A basic homeowner policy may provide very modest coverage for selected activities. However the coverage may be limited to as little as a few hundred dollars. Items that may be covered includes business personal property kept in or around your home, business personal property kept at a location other than in or around your home or landlord's furnishings (property in a part of your home that you rent out to the public). One method for improving your coverage is to add options to your policy to do the following:
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Do Telecommuters Have Special Insurance Needs?
Do you have an arrangement with your employer to work from your home for either part or all of your work week? Is it an on-going rather than a temporary agreement? If your answer is yes, then you are among the nation's telecommuters. The increased flexibility you enjoy by not having to fight commuter traffic or squeeze into a cubicle is accompanied by a special set of concerns regarding insurance coverage for your property and for your legal responsibility to other persons. Following are some important coverage needs that any telecommuter must examine. Home Property You may have gaps in coverage caused by either business property that belongs to your employer that is kept in your home or your own property that is used either fully or partially to perform your job duties. In either case, you'll find that your home or tenant's policy severely restricts or excludes coverage for property having business-related use. What complicates this situation is that such property usually consists of high-valued items that are vulnerable to damage and are also attractive to thieves. This property includes items such as fax machines, copiers, computers, computer peripherals (monitors, printers, scanner, modems) and phones, answering machines, etc. Home Liability While your home or tenant's policy protects you against most instances in which you cause others injury or damage others' property; the situation is changed when the loss has a business connection. Personal insurance policies that include liability protection typically exclude business-related losses. Further, different policies can be quite broad in interpreting how a loss is connected to "business." Liability Policies A and B would routinely respond to handling an insured who spilled hot coffee on a guest in his home. What if, instead of being a social guest, the visitor was your employer's client? Policy A may still offer coverage because it considers the coffee spill to be a common home hazard. But Policy B may flat-out exclude the loss because the injured person was in the home for a business reason. Vehicle Liability Instead of using your personal vehicle for going to and from work, more of your vehicle use may be related to your job. Many instances of job related use may be excluded from your personal auto coverage. Home Accidents Simple events may be complicated when they occur in the course of performing your job at home. Coverage for injuries suffered while going up the stairs or experiencing a prolonged illness may cause coverage questions for your employer. Individual company or state-mandated coverage for employees may not apply to work-related accidents that occur at home. Document What You Do In order to determine what insurance coverage needs you have to address, you must clearly identify your exposure to business losses. Document the following:
Once you have a good idea of the loss exposures from performing your job at home, you need to discuss your situation with an insurance professional. An insurance pro can help you find additional coverage options as well as help to identify what coverage gaps must be addressed by your employer. While it can be liberating to telecommute, you must make sure that you haven't given up important protection along with your cubicle. |
