My wife is an avid reader of business publications, so I wasn’t surprised when she handed me the Jan. 30 issue of the Wall Street Journal while we were drinking our hot morning libations, and pointed to an article by Joanna Ossinger titled, “No Coverage — So, you think your homeowner policy protects your home-based business? Think Again”.
How right she was! Ossinger wrote, “Regular homeowner’s policies cover only a fraction of business-related claims...” She quoted Madelyn Flannagan, vice president of education and research at the Independent Insurance Agents and Brokers of America, who said, “A typical homeowner’s policy covers only about $2,500 of on-premises business equipment, and just $250 off-premises. In addition, the policy is unlikely to contain any liability coverage for business-related accidents.”
I work out of what was originally a two car garage that was converted to an apartment in the 1960s or so. Under the regulations of my county for a Home Based business, I am allowed to have only one employee, and I can’t hang anything in the way of a business name on the building. I rarely invite customers to my office. I am an “organized clutter” type of person, and I prefer to go to wherever they are or meet in neutral territory for lunch or coffee.
Though I never have added up the total value of my office equipment and travel “stuff,” I know it is significantly more than $2,500. What bothered me most is that I had never considered asking my insurance company what was covered and what wasn’t. Having bought, sold and rented a number of houses during 26 years in the military, we had always taken the time to ensure we were properly covered for all the natural and man-made disasters that could befall our home.
Obviously, I called my insurance company to get the scoop. We had placed a fire policy on my building to cover an estimated replacement cost, and the main dwelling policy covered liability and a variety of other coverages since all buildings were on the same parcel of land. But there was no coverage for anything in the building! Had we had a fire/hurricane/flood etc. that wiped out the office and everything in it, I was essentially uninsured for its replacement.
Though perhaps a third of the “stuff” I have in the office (guy stuff and memorabilia from previous parts of my life that my wife doesn’t want in “her house”) should be burned, I would have to replace the machinery of the office out of pocket. The solution was pitifully simple. For $91.91 in additional premium, I added $20,000 in personal property coverage for all my stuff. My insurance company defines “personal property” for the policy by stating, “If you could turn the building (sans roof) over, your policy will cover anything that falls out.” Sounds good to me!
Dig out your policy and immediately call your insurance agent. We all push our clients to purchase insurance. We had better all heed our own advice! Ignorance isn’t bliss in this situation!

Russell (Rusty) Pickett is a retired career Naval officer. He has a BS from Yale University and an MBA from Charleston Southern University. As a Home Based agent, he founded Shellback Cruises, a cruise-oriented agency based in Charleston, SC, in 1999.