Ok everyone, I have a very important question…My studio is set up
in my house and I was recently advised that this may not be legal
AND that if anything were to happen to the house i may not be
covered by my insurance…say a fire for example. It was my belief
that you could not operate a storefront from a house, however, a
business such as making jewelry should be okay…I thought most
jewelers with their own business worked from home. I live on the
main line in Phila, Pa…if that matters according to the law. If
anyone has any info. about this or knows where I could go to find
anything out I would greatly appreciate it, as i do not want to get
into trouble.
Laura, I also have my studio in my home. I sell strictly by “word of
mouth” at this point. My insurance company said as long as I called
my “studio work” a “hobby” I would be covered for everything in the
event of a fire (it would count as personal effects). But as soon as
I named it a business, I would have to have business insurance etc.
etc… They weren’t at all concerned about my housing an acetylene
tank in the house even when I asked would I be covered if my tank
blew up. They said “sure” - no different that if you left your stove
on and burned down your house.
So, it would appear that as long as it’s a hobby, you’re covered by
your homeowner’s insurance - as soon as it’s a business, you’re not.
The rules about whether you can operate a business from home is a
village ordinance issues. You have to check with your own town.
Many towns used to prohibit this, but as more and more people are
able to work from home in ways that do not disrupt the neighborhood,
many towns have relaxed that rule.
They haven’t gotten rid of the rules entirely, because they want to
be able to stop people from having semi-trucks do deliveries in
front of their houses everyday, having events with 50 cars parked
out front. Generally you’re not supposed to “change the character
of the neighborhood.”
The other issue you’ve raised is insurance.
If you have a torch, and fail to share this with your
insurance company, and your house burns down, even if it wasn’t the
torch’s fault, the insurance company can cancel your policy because
you lied.
First off, local municipalities often have laws/regulations
governing what can and can’t be in a private residence. Whether the
home is single-family, multi-family, or apartment and rented or
owned should also influence the decision. A call to your local
zoning board should be able to clear it up for you. When I set up my
“secondary” studio in my home (also in PA outside of philly), I
called and explained what I wanted to do and discussed it with the
zoning officer. He advised me on certain “boundaries” (i.e., seeing
customers in my home by appt vs a storefront “walk-in” operation).
He also made me aware that it is illegal to have any type of propane
cannister in an enclosed building, but that there was no problem
with acetylene (a fairly common distinction). If I was going to run
my torch on propane, the tank would need to be installed outside
with piping running from it into the structure. That was one of the
many reasons I went with acetylene for my torch setup.
The other side of your question is actually an insurance one. I
would, again, recommend talking with your homeowner’s insurance
agent. In our case, all we needed was a policy declaration for tools
and materials to be 100% covered for replacement value (again, an
important distinction). I pay a slightly increased (I think around
$10/month?) premium for the rider, but the peace of mind is worth
it. I think of it the same way as the rider that covers other
expensive items (over $2000/each) like jewelry, antiques, etc. - if
they are something that valuable, it pays to cover them.
You need a small business liability policy. Your home owner policy
will not cover damage or injury if caused by a jewelry business run
out of your home. (Fire or a tank exploding or a customer getting
injured) I had a million dollar policy for my home studio and now
that am in a commercial building the policy is for millions more.
So, it would appear that as long as it's a hobby, you're
covered by your homeowner's insurance - as soon as it's a business,
you're not.
Insurance agents are basically salesmen not claims adjusters and
will may say one thing but the claims adjuster will have a totally
different view of the situation and if you are selling any of your
work they will classify it as a business and disallow the claim.
This has happened to more than one artist. If you are selling your
work you are in business and need business insurance if you are just
doing it for fun then it is a hobby and probably will be covered by
your homeowners policy
Jim Binnion
James Binnion Metal Arts
Phone (360) 756-6550
Toll Free (877) 408 7287
Fax (360) 756-2160
@James_Binnion
Member of the Better Business Bureau
I am glad to see a thread related to studio insurance.
I have a retail space/studio on City owned property for which we
carry liability insurance only. I also have a second studio at home
which I use only a couple of days per month. I have found it
prohibitive to carry Jeweler’s coverage and am willing to accept the
loss of inventory if that be the case, but my home is another story.
I would like to know how to approach my insurance company about
having acetylene in the house. Is it a home business when I see no
clients there, and do so little actual work there? I think that the
way I put it to the insurer will have a an influence on the coverage
they can provide me. So is the home studio a “hobby” in this case?
You basically get it correctly. plus if the city or community
has no manufacturing in a residential area, your home owners
insurance will be void.
Well, yes and no. I was once a claims adjuster in the dim and
distant past. I would venture to say that no adjuster worth his
license will give you a flat statement as to whether or not a
company would pay in any given case. He or she might give an
educated opinion, but probably would not bet the farm on it. One
thing that results in a pretty fair chance of voiding the policy is
lying on the application. If the ap form asks whether or not you are
running a business in your home, you would be very wise to tell the
truth. Once you have the policy, pay close attention to the
“exclusions” section and the endorsements. There are several
standard insurance forms. They provide differing levels of coverage
for which you are charged differing amounts. The endorsements
provide additions, deletions and modifications to the various
provisions in the basic form. Not only that but insurance law is
constantly being revised and added to through court decisions and
state legislatures are constantly exerting their influences as well.
What I’m trying to say is that no one on this list is be able to
make a definitive statement regarding your chance of recovering in
any given instance once the loss has occurred. By the way, the
respondent who said that their is a lot of difference between what
an agent will tell you and what the claims people will tell you is
right on. Sales and claims are two distinctly different parts of the
business.
know how to approach my insurance company about having acetylene
in the house.
Get a “Hydroflux” or other water torch & get rid of all of
compressed gasses from your home! Would be my suggestion. Safe, far
less trouble over time and the leave your work cleaner.
If you consider that impractical try propane, but leave the tank
outside & pipe the gas in. And yes, I have acetylene, propane & mapp
gas at ‘home’, but in a seperate building with an insurance rider.
Jerry in Kodiak, thanks for your “insiders” explanation about
truthfulness to your insurance agent. A couple years ago, this same
thread came up and reminded me to check into my insurance coverage.
Oddly enough, the insurance agent was most uneasy about my small
kiln for firing metal clay, and not nearly as concerned about my
torch, which uses natural gas and compressed oxygen.
Didn’t make much sense to me, but I made sure that the company had
the straight skinny on what I do.
My studio is set up in my house and I was recently
advised that this may not be legal AND that if anything were
to happen to the house i may not be covered by my insurance
I too have agonized over this and have concluded several things:
In making my jewelry, I’m not doing anything illegal to do in
the home
I have a P.O. box as my business address
My business is almost all conducted through retail art shows,
for which I pay considerable “rent”
Therefore my business is conducted outside the home and does not
run afoul of the insurance company.
I suppose this could come back to bite me, but as long as my torch
does not burn the house down I feel it is a reasonable risk.
My studio is set up in my house and I was recently advised
that this may not be legal AND that if anything were to happen to
the house i may not be covered by my insurance
I suppose this could come back to bite me, but as long as my
torch does not burn the house down I feel it is a reasonable risk.
Yep – Insurance companies use a non-disclosure clause which says
that anything that you don’t tell them can be used to invalidate
your insurance. Of course if you do tell them they will charge you
more.
Remember, Insurance is a bet. You are betting that you are going to
have an expensive accident and the insurers are betting you won’t.
If the ap form asks whether or not you are running a business
in your home, you would be very wise to tell the truth.
I’m not sure of the definition of “running a business out of your
home.” As a goldsmith, I make stuff, I sell my stuff at my gallery-
which is at another location. I run my business in a metropolitan
area, I make jewlery in suburbia. So, in that case, how would I
answer? I would not be lying if I said I do not run a business from
my home (or would I?)
I'm not sure of the definition of "running a business out of
your home." As a goldsmith, I make stuff, I sell my stuff at my
gallery- which is at another location. I run my business in a
metropolitan area, I make jewlery in suburbia. So, in that case,
how would I answer? I would not be lying if I said I do not run a
business from my home (or would I?)
Aye, there’s the rub! Each claim is different and how it goes can
depend on the company involved , small individual differences and
the latest court decisions. When I was in that dodge, and I assume
it is still the case, there was a publication,( the name of which
escapes me), which was updated several times a month. This pub gave
the latest court decisions and interpretations regarding
recentcases which affect insurance law throughout the country. When
a case is not cut and dried, the adjuster goes to that reference and
tries to figure out just what the current law is. If you have a
loss, let’s say a fire. A savvy adjuster going through the ashes
would notice your studio. He would ask you in taking your statement
whether the stuff in the studio had something to do with a
business. He would record your answer and eventually would ask you
to sign a transcript thereof. If you had a standard homeowner’s
policy with no special coverage endorsements for the stuff in your
studio, any claim for loss to that stuff would be denied. If
somethiong in that studio was the cause of the fire, you would
probably find yourself fighting the company in order to recover for
anything, business related or not… Whether or not that happened
could well depend on the company involved. Some companies are a lot
nicer to their insureds than others. I could go on for a long time
on this thread, as it is an unbelieveably involved subject, but I
won’t. As I mentioned in my earlier post, the wise adjuster will not
make a definitive statement about whether or not you would recover
on a loss in any specific case. The claim ain’t over until it’s paid
and someone has a signed release or Proof of Loss in hand, and even
then it’s not always over!
Yes you do run a business from your home. Just because it is not
sold out of your home does not exclude what you do as part of your
business. If you sell wholesale to a gallery or even have your
gallery at another location, what you do in your home is classified
as light manufacturing and is a business. You procure supplies,
manufacture a product and then distribute it.