Does homeowners protect self-employed individuals against damage in the home?
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I am self employed and operate my business out of my home. Am I able to make claims against my homeowners insurance if I need to?
Asked February 3, 2016
Homeowners insurance is designed to cover your home and other structures located on the same property as the home. Not only will the insurance pay to repair the guest cottage, it also covers the repair or replacement of your personal property. The problem you have is that home insurance is not meant to serve as business insurance.
If you are operating a home business, it would be best to insure the business separately from your home. This would give you better protection for things like computers, and would eliminate the danger of your insurance company denying a claim. Contact your home insurer and ask them what their regulations are concerning home businesses. Some companies will charge slightly higher rates to cover the increased risk; others will tell you to buy business insurance separately.
Something you should consider before trying to file a claim for your computer is whether it is worth filing. If you have to pay a deductible before the insurance company settles the claim, you may discover that the deductible is higher than the cost of the computer, or only a little lower. In that case, you would be better off to pay for the repair yourself. This would preserve the home insurance for a time when you need all the help you can get instead of just needing a little assistance.
Another problem is that any insurance claims you file will be kept in a database for 7 years, called CLUE. Short for Comprehensive Loss Underwriting Exchange, your CLUE report is used by insurance companies to help determine your premiums or whether to insure you at all. If your CLUE report shows numerous small claims, you are probably going to pay higher rates on all of your liability policies the next time they are renewed. If there are too many claims in your CLUE report, you may not be able to get traditional insurance policies, leaving you to get coverage through high risk insurers.
Answered February 10, 2016 by Anonymous