If you babysit a few children in your home five days a week for extra money, does your homeowner's insurance protect you if a child gets hurt in your house? If his parents successfully sued you, would your homeowner's insurance cover you?
What if you operate a computer business out of your home and a client slips on the floor and breaks a leg. If he sues you, are you covered by your homeowners insurance?What if an electrical fire damages the home computer that you use for business? Is it covered by your homeowner's policy?
According to the Insurance Information Institute, many Americans earn their livings without even leaving home.
If you're going to start a business enterprise in your home - full or part time - the institute suggests you check with your insurance agent to see what coverage you'll need.
Basic homeowners insurance policies are not designed to cover liabilities that arise from business activities.
You may not automatically need commercial property and liability insurance for working at home. Insurers offer endorsements on home policies that provide liability protection for some business activities.
An example is a home day-care coverage endorsement that extends liability coverage already on your home policy to protect your for-profit babysitting of up to three children.
In the case of the fire-damaged computer, you may be covered for at least part of the loss. That's because many homeowner policies already provide up to $2,500 of coverage for equipment and furniture you use for business at home.
Other policies may provide coverage up to as much as $10,000 for business supplies and furnishings but only if the business is incidental.
What is incidental? That depends on the policy. Some companies define incidental as a business that grosses less than $5,000 yearly.
An incidental business occupancy endorsement extends coverage to other structures such as your garage and the contents of your home to protect your business property. The endorsement widens your personal liability protection to cover possible lawsuits from business visitors.
A business pursuits endorsement extends a homeowners policy to cover any damage arising out of the telecommuting activities for which people who stay at home and hook up to the office by computer modem or telephone are legally liable.
Some insurers offer the business pursuits endorsement only to clerical teleworkers. Other types of occupations at home require a separate commercial insurance policy.
For details check with your insurance company or agent.
For more information consult the book "How to Get Your Money's Worth in Home and Auto Insurance" published by McGraw Hill. It sells in paperback for $12.95.