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Occasionally, I run into traditional businesses leasing space in our strip malls, have signs on the buildings, and employees on the floor, which don't have business insurance like they should. I'm working with one such business in Gilbert, AZ right now which is uninsured.

I'm always amazed when I see this in a traditional business that has incredible exposure to risk just by opening their doors to the public.

Unfortunately, this phenomenon is much more prevalent with home based businesses in my experience.

Many home based business owners mistakenly believe their home insurance or renters insurance will provide adequate protection for their business activities. This couldn't be further from the truth. This is but one reason why home based business owners don't buy the proper insurance. Read this post that includes two more reasons why home based business owners don't buy this valuable coverage.
3 Reasons Home Based Business Owners Don't Buy Business Insurance.

Your home insurance or renters insurance policy have specific language which excludes payment of bodily injury and property damage liability  claims. If you review your policy in Section 2, Exclusions (or Losses We Do Not Cover) you will see an exclusion which states something along this lines: (I'm quoting from the Kemper Preferred policy)

1.b.  Arising out of  or in connection with a "business" engaged in by an "insured." This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of  the "business."

he wording varies policy to policy so it's important to read yous carefully and ask your agent to review it with you. But, the fact is every insurance company WILL exclude liability claims related to business pursuits.

I remember being at the residence of a home based seamstress and witnessing a cat wearing a diaper roaming the house with access to the bedroom where clothing was being altered and a wedding dress hanging on a door in the hallway. Obviously there were concerns about the cat doing some damage hence the diapering so I asked her about her insurance. She told me she had State Farm for her home insurance and she was confident that State Farm would pay a claim if something happened. I advised her to review her policy with her agent as she probably wasn't covered for business liability as she thought.

This business owner is not alone in this mistaken thinking. There are many others out there like her, including possibly you if you have a home based business and you're reading this now.

The WARNING that I give to you is this: Your insurance company will not, can not, defend you in a court of law for which NO coverage applies under your insurance policy. They just won't do it. 

You will have to go it alone. The cost to the business owner to defend a lawsuit in court and pay a judgement, if found negligent, could be ten of thousands in not hundreds of thousands of dollars.

Most Home Based business insurance policies aren't that expensive. In fact, many types of business classes can be insured for under $300 annually, providing the necessary liability protection your business and your family needs.

Call my agency (I'm a home based business just like you) to discuss your business with me so I can find the right policy to meet your needs. ?

Author Richard Morris

Richard Morris, an independent insurance agent in Chandler, Arizona, has been serving and helping Arizona families with all their insurance needs for over 23 years. Visit his website at to see all the ways he can help you with your insurance needs or call the office at (480) 336-2707 or toll free at (888) 907-9349. Connect with Rich on Google+ and Twitter.
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