From Insurance for Dummies by Jack Hungelmann

The Homeowners policy is designed for residential — not business — risks. As such, it’s no surprise that coverage for business personal property is minimal — typically $2,500 at home and $250 away. Also, there is usually a complete exclusion for business data — both on paper and electronic media. This article deals with how to protect yourself from being hurt by those limits and addresses insuring business property you have at your home if you don’t own the business.

Defining “business”

The definition of business in most Homeowners policies clearly includes your regular job. But does it include part-time jobs, home babysitting, or summer lawn jobs? Unfortunately, that’s subject to interpretation. Because the policy is vague, the courts have gotten involved.

The courts have defined business, as used in Homeowners policies, to mean an activity that both earns revenue and is continuous. A once-a-year garage sale would not be a business. But my friend Bobbie’s garage sales, which she’s conducted out of her garage for the whole neighborhood, once a month for 20 years, may be a business, and the $2,500 limit would apply.

Similarly, your 12-year-old son’s use of your $600 Toro mower to do a few summer lawn jobs probably isn’t a business because it’s not continuous. But your 18-year-old son’s $10,000 investment in landscaping equipment, pulled on a utility trailer and used year round, may be a business.

Finally, if you have an incidental home office where you telecommute or bring work home to with a desk, filing cabinet, computer, fax, and so on, you are subject to the business-property limitations of the policy.