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Do You Have Home Business Inventory Insurance?

written by: Cherise Kelley•edited by: John Garger•updated: 6/28/2011

Don't wait until your house catches fire to find out if all the things you have on hand to run your home business are covered by insurance! Read on to see how you can find out today.

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    What is a home business inventory?

    Do you assemble computers, radios, GPS systems, or other gadgets at home for clients? Do you paint pictures or throw pottery or sew doll clothes or make jewelry or do other craftwork at home to sell at fairs? Do you assemble product at home as an independent contractor for a manufacturer? These are examples of activities which require you to keep a home business inventory.

    in·ven·to·ry –noun

    1. a complete listing of merchandise or stock on hand, work in progress, raw materials, finished goods on hand, etc., made each year by a business concern.

    2. the objects or items represented on such a list, as a merchant's stock of goods.

    3. the aggregate value of a stock of goods.

    Dictionary.com Unabridged (v 1.1). Retrieved September 11, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/inventory

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    Business inventory is usually excluded on homeowner's insurance.

    If your home catches fire, is robbed or is flooded, then you might expect your insurance to pay your cost of replacing your home business inventory. Do not assume this will happen. The insurance industry believes that each major category of property should have it's own insurance policy. For this reason, your home and your car each have their own insurance. They are excluded on each other's policy. In the same way, the insurance industry believes business inventory should be covered on a business insurance policy, not on a homeowner's insurance policy.

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    How you can tell if your home business inventory is insured by your homeowner's policy:

    Read your entire home insurance policy carefully. Pay special attention to the Contents section, and to any exclusions or conditions. Throughout the policy, look for the words "business" and "personal". It is not possible to tell you here exactly where in your policy this might be addressed, nor exactly what wording will be used. Each insurance company writes its own policies, and they are different for each state.

    If you don't feel able to read your policy carefully enough to determine if you are covered, then call your insurer's claim phone number. You can find it on your insurance bill. You may feel more comfortable calling your agent, but agents don't handle claims. Most agents aren't familiar with the technicalities of coverage questions. They often call the claim phone line themselves to get answers to coverage questions. Ask to speak with a property adjuster.

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    Your options if your home business inventory is not insured:

    You can get a business insurance policy. You can store your inventory more securely or someplace else, or in several different places. You can retain the risk of losing your inventory by having a savings account to cover the cost of replacing it. If you work at home as an employee, then your inventory actually belongs to your employer. Your employers may have it insured or have some plan in case it is lost or destroyed. check with them.