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I recently read an article that reiterated how important it is for individuals who operate home-based businesses to be properly protected. In short, the article detailed how a participant in a Zumba class (which happened to take place at a fitness club ) suffered a stroke during the class. The instructor filed a claim with her homeowner policy and the claim ended up being denied.


The case ended up going to an appellate court in Arizona (which is where the situation occurred) and the jury found that the instructor’s activity at the club constituted “a trade, profession or occupation,” even though she was teaching on a very limited basis. This in turn affirmed the exclusion in the instructor’s homeowner policy that pertains to business activities.

The exclusion for business activities is something you will find in all homeowner policies, so it’s very important for anyone who operates a home-based business – no matter where the business is actually conducted – to obtain the appropriate liability insurance coverage.

As a general rule of thumb, if you’re engaged in a business where you earn more than $2,000 per year, you should consider obtaining a commercial general liability policy or a business owners policy (which will provide property coverage for your business property in addition to covering your business liability exposures) but the actual nature of your business may dictate otherwise so be sure to discuss with your local independent insurance agent.

Keep in mind that property coverage provided by your homeowner policy could also be in jeopardy if you are operating a business out of your home (this includes selling Mary Kay, AdvoCare, etc.). For example, homeowner policies contain specific “other structures” exclusions pertaining to business operations, so if you’re conducting a business activity out of a detached garage, shed, or barn, you might find yourself with no insurance coverage if that “other structure” is damaged or destroyed.

When in doubt, speak with your local independent insurance agent to learn more about how you can properly protect any property and/or liability exposures associated with a business you operate. Earning a little extra money on the side is great… until you realize you have no insurance coverage for it.

Thanks to Central Insurance Companies for the article. 


Posted by Brock Insurance | Topic: Topic 3

Short Term Rental Insurance

August 8th, 2018

Do you own a short Term rental? 

Then this article is for you.

Finally proper insurance to cover your rental. Our team at Brock can walk you through the options and help you choose the right coverage for your rental or rentals. Whether its the whole house, cabin, condo, town home or room we've got you covered. Not sure what needs to be covered or why. Contact our rental specialist John Brock today to protect the rental and yourself.    

FAQ

What is considered short-term renting? In the insurance world, a property that is rentedfor less than 30 days at a time is typically considered short-term. A property in which therenter does not reside/live at the dwelling. 

Why does my homeowner's policy not cover my short-term rental? All homeowner'spolicies carry a "business activity exclusion". In other words, any claim involving a"business activity" could rightfully be denied. 

Is my short-term rental really a business? Yes. More and more cities like Austin, SantaBarbara, and Chicago are now requiring short-term rental owners to carry and pay for abusiness license. Note: Starting Feb 2015 in San Francisco Airbnb Hosts will be required topay 14% hotel tax and carry $500,000 in liability coverage. 

How do I get covered for business activity? You buy a business insurance policy. TheProper Insurance policy is a business policy. It covers your business property(rental home/contents), business liability, and the business income it generates. 

If I insure my short-term rental as a business, can I also stay there? Yes. There are nostandard occupancy restrictions on a business policy. This means the property is insuredwhile you stay there, friends or family, and of course paying guests. 

My short-term rental is also my primary residence, can I still purchase the ProperPolicy? Yes. If the short-term rental home is also your primary residence, Proper simplyadds $1,000,000 in personal liability and $50,000 in loss of use to relocate in the event theproperty is being rebuilt. This is very important if you do not carry a homeowner's policyelsewhere. 

What if I also live at the short-term rental, can I still purchase the Properpolicy? Yes. You have the same business exposure. We see every scenarioimaginable. You live upstairs and short-term rent the downstairs. You live in the main home and rent out the guest house, etc. 

If I have the Proper policy do I keep my homeowner's or landlord policy in place? No. TheProper policy is designed to fully replace the current coverage you have. You wouldcancel your current policy.  

FAQ provided by Proper Insurance


Posted by Brock Insurance | Topic: Topic 3  | Category: Short Term Rental Insurance


When underwriters think about risk, perilssuch as fire and theft come to mind. One risk that can be overlooked isimproperly underwriting multiple named insureds. This article will discuss theimportance of underwriting named insureds.

A key element on any commercial insurancepolicy is the named insured. A named insured can be defined as “any person,firm, organization, or any of its members specifically designated by name as aninsured(s) in an insurance policy.”[i]The named insureds are listed on a policy’s declarations page. We shouldremember that named insured status provides full coverage under the generalliability policy. Consequently, it is vital that we understand all of theoperations of any named insured listed on a policy.

With just one named insured, this is simple.The underwriter assesses the named insured’s operations and then decides toeither accept or decline the risk. However, with multiple named insureds, thisprocess gets more involved. If you have more than one named insured on apolicy, then we have a first named insured.  The first named insured mustexercise management control over all of the other named insureds on the policy.To justify adding additional named insureds to a policy, the underwriter mustreview the following: First, does the new named insured have an insurableinterest? That is, is there an ownership interest that justifies adding thisnamed insured to the policy? In particular, are we comfortable with the newnamed insured’s operations? Moreover, we need to determine if the namedinsureds are combinable. To be combinable, the entities should have commonmajority ownership. This means one named insured owns more than 50% of theother named insureds. Or more than 50% of each named insured is owned by thesame majority owners. In summary, if there is a valid insurable interest foradding newly named insureds, the named insureds are combinable and the firstnamed insured exercises management control over the other entities, anunderwriter can feel comfortable adding these additional named insureds.

What is the problem if you add a named insuredto a policy that doesn’t meet this criteria? It can create a conflict ofinterest. You could encounter what is known as cross-liability. This means oneinsured suing a party who is also an insured on the same policy! This canhappen under the principle of severability of interests; that is, liabilitycoverage is provided separately to each insured. In short, poorly named insuredunderwriting can lead to a conflict of interest and litigation betweendifferently named insureds. 

Named insured underwriting is a critical task.The underwriter wants to make sure the additional named insureds have aninsurable interest, these entities are combinable, and that the first namedinsured is exercising management control. Failure to do so can lead to aconflict of interest or possible litigation among the entities.  In short,underwriters must always carefully underwrite their named insureds.

Resources:

[i]International Risk Management Institute GlossaryOf Insurance And Risk Management Terms 10th edition 2006Page 162

 Postauthored by Alex Plotkin. Originally published June 20, 2018. View original post at:

https://wp.me/p1Iv7E-2L9

 

Products underwritten by Central MutualInsurance Company and affiliated companies.

Copyright © 2018 Central MutualInsurance Company. All rightsreserved.

Posted by Brock Insurance | Topic: Topic 3  | Category: Commercial Insurance

Home-Based Businesses: Are you properly insured?

Home-Based Businesses

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