Are You Underinsured? Probably Yes.

imgresPerhaps the most misunderstood fact about homeowner’s insurance for a family child care provider is that your policy probably covers only about $2,000 of the entire contents of your home.

Homeowner’s insurance policies typically cover only about $2,000 of business property. But since business property is defined as property that is ever used in your business, most everything in your home is business property (furniture, appliances, bedding, lawn mower, and so on). This means that you are probably underinsured for the contents of your home.

I have spoken across the country for years talking about this unpleasant fact. In my talks I illustrate this with the story of a provider in St. Peter, Minnesota who suffered when a tornado whipped through her town and destroyed her home and everything in it. She received only $2,000 for all of her household furnishings because she had the typical homeowner’s insurance policy I’ve described.

Call up your homeowner’s insurance agent and ask if the contents of your home are fully insured even though it is used in your business. If your agent says that your property is covered, ask for this to be put in writing. If it’s not in writing you are probably not covered. If you are not covered the insurance company will likely offer you a business property insurance policy that will cover your household items. Such insurance is relatively inexpensive.

This week I received an email from Deb, a family child care provider from Minnesota who attended one of my talks and heard me discuss this. She wrote:

“I thought to myself I had better check that out.  Ironically the next day, a review of my coverage came, as it was renewal time. Sure enough…the wording was just as you had said!!  For years, had something happened, I wouldn’t have been covered!   I called my insurance agent and asked him if he knew what I did for a living.  When he said yes, that was all I needed to hear.  I started looking for a new agent and switched.  When he called to ask why, I told him.  He didn’t even apologize for the oversight or thank me for my business over the years, nothing.  Thank you!”

What has been your experience with your homeowners insurance agent? 

Tom Copeland –

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Legal & InsuranceFor more information about homeowner’s insurance and other types of personal and business insurance see my Family Child Care Legal & Insurance Guide.




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