I'm not an insurance expert (nor a create-a-business expert), but here are two thoughts:

- Does your husband know what kind of business he will create (sole proprietorship, S corporation, etc.)? That may have an impact on the choice of insurance he must have and/or can get.

- If it is a sole proprietorship, ask your current insurer if perhaps an umbrella liability policy would be suitable. Umbrellas extend your existing home and car coverage to a level you specify ($1 million, etc.) and don't cost all that much (because they're not claimed against frequently).

You also could call some other insurance agents asking them about home coverage and mentioning the home-based business and see what they say, just for the sake of comparison.

Thanks for the reply.

I think my husband's business will be a sole proprietorship, although we were advised to talk to a lawyer about incorporating, to protect our personal assets. I'll ask the insurance agent to quote rates for both types of businesses.

We do have an umbrella policy currently, with the same insurance company as our homeowners and our auto coverage. Unfortunately, this is the company that says they'll drop us if we have a home based business, so I'm going to be shopping for new insurance for everything if we do decide to go with the home business.

Such a pain in the neck.

This is what happens to you when you try to do things right.

If you want to have some more fun, call your mortgage company and tell them that you are going to start a business in your home. (If you take out a business insurance policy, the mortgage company will, of course, find out that you did that, because they require insurance to be in force as a condition of your mortgage.) There are probably provisions in your mortgage that prohibit turning your home into a place of business. Your city officials may have something to say about it as well, even though you won't have any sign or other exterior evidence of "a business."

Before you call anyone else, read your existing homeowner's policy over VERY carefully. You may well find that there are loopholes that could allow occasional business use of your home. It's not like your husband is going to put up a big sign and turn your house into a full-scale business. (Zoning wouldn't even allow that, of course, unless you already live in a commercially-zoned area.)

Many of the things people do are probably in some technical violation of a mortgage, insurance policy, or local zoning rule. I'm not saying this is okay, or that people just should ignore these types of things, but there is a reasonable threshold of common sense you have to consider. My position at this point would be that what your husband proposes to do is on a very small scale. If it really takes off and he has customers showing up every day, he'll probably want to take this out of the home into a proper commercial location anyhow.

That's a good thought, I'll have to read over my mortgage papers to see if there's any prohibition about running a business at home.

Re: the zoning, it's an "appointment only" business and the signs state that. Several of our neighbors have similar small businesses and signage, which is enough confirmation of the legality for me.

Insurance is one area where I don't want to bend the rules, even slightly. We'll have people parking on our property, using walkways, going up steps inside the house. My nightmare is that we'll get sued for a million dollars and lose everything because someone got run over and killed in our parking area.

After lots of running around, I managed to get a reasonable quote from an agent, and we're probably about a week away from getting new homeowners/umbrella/business liability policies.

I used to handle auto/fire claims. Most HO policies have some riders to cover office equipement but not liability (injuries). You will need a business policy. It should not cost $1500 a year for what you described.

In terms of inc. you may just want to set up a LLC to protect your assets. Full Inc may not be warranted but talk to your tax advisor or an accountant. If you husband wants to borrow money for the business i dont believe a bank will lend to the corporation but your husband only since this is a new business.

Your liability policy should be a minimum of $500k depending on what your husband intends to do in the home. An umbrella is a good idea as it will provide another $1 million.

The Mills of God grind slowly ...

... but they grind exceeding small.

So I've heard.

Don't know whether they handle DVDs (for a different business than that to which the original poster referred).

Oh ... right ... the lady has to take on the other business to pay the insurance. She should have some surplus ... I think that he spoke of 7 figures (possibly including some "000"'s in front of the "1"?).

ole joyful

One thing would bother me, is there might be people coming to the house that I would feel uncomfortable with. You cannot deny anyone just because you don't like their looks, color or religion. Once the business gets going, the word gets out and who knows who will come by. I would prefer looking around and find a small room etc in the business section of town, away from my personal house. Guess that is living in a large city. You learn not to trust as much. Even in small towns there is always a danger element. Also just because others have small business, you should check with the building dept and the city--do you need a city business license? Also check with your tax person. IRS has strict rules about doing a business in your home. You have to meet certain qualifications. Separate phone lines? Separate computer? Lots to think about to protect you and your family. Would it be soundproof? Neighbors? Traffic?

I don't understand why everyone says that if you incorporate that will cut your liability. If somebody trips on your stairs and gets injured--they get to sue you. I am an attorney, so if your business is a corporation, you better believe that I name the corporation and you personally. Then you file an answer and get to pay two filing fees. The next time somebody says that a corporation will shield your assets from liability ask if they think you should put your car and house in the name of a corporation and not have any insurance.
As to Mariend's comment about IRS, they have rules about whether you can take the home office deduction. You can have a small business at home and take all of the other deductions which usually zero out the profit for the first few years.
You do have to check with your city and get a license. It depends on where you live whether they would allow a business with the kind of traffic you are suggesting. The Fire dept does visit and look over the office area for exits etc. in many cities. I would give Mariend's ideas some thought, I think its one thing to give music lessons in your home, where you control who shows up, but you wouldn't have that much control.

I'll ditto what mariend said:
"One thing would bother me, is there might be people coming to the house that I would feel uncomfortable with"

We have our office in our home (we farm & have multiple employees) and live on an acreage near a small town. We had a guy apply for a job, filled out the application, hubby showed him our operation & in doing so asked interview type questions. Afterwards not one of his references was real. Months later as we read the paper, in the court proceedings was this guys name, John Doe, AKA......., AKA...... charged with theft by deception. He was scoping out our place. At that time we had small children & that was a whole other area of concern.

We live along a highway and have various people stop by due to car problems, out of gas, weather-related concerns, or to sell things, I never go to the door without a cellphone or business band radio in hand. Sorry, but I'm really leary about who I let in my house anymore. We had a new pickup stolen in the middle of the night from our shed less than 50' from our bedroom window. (this happened years later--totally separate from the job applicant incident). Once you've been "spied upon" or taken advantage of your level of trust adjusts quickly.

Obviously you'll be running a legitimate business, but you'll still have random people coming to check out your services. It just takes one bad apple to start souring things quickly.

"By appointment only" must be enforced ruthlessly and without emotion. Word "gets around". Here's how I deal with it:

No appointment? you wait at the door (which I close and which locks) while I get my appointment book. You stand on the doorstep, I stand on the threshold, while we set a date and time for your APPOINTMENT. My 100 lb. dog sits behind me through all of this (after he's sounded the alarm). You will understand quickly that you have violated my privacy and that it is not to happen again. I'm polite, but brusquely efficient. I can count on one hand the number of "drop ins" I've had in nearly 17 yrs..

All the above is what happens IF I deign to answer the door, at all. ;)

"By appointment only" means exactly that.