My hubby and I recently acquired a small house that we had intentions on renting out to people, but instead my hubby thought that I might start up my cake business again out of the kitchen there. I will be baking and delivering from there, and I don't plan on having too many people over, unless they want to come sample or pay. We are running into so many problems with insurance now, because they seem to want to classify it as a bakery business instead of home based, with a huge quote. Is there something we are missing? We are trying to do this all the right and legal way but it seems so difficult to do! Any advice or help would be SO appreciated! Thanks!
(ps, my glasses aren't even on this morning yet, so I hope this all makes sense@!)
Talk to another insurance agent-preferably an independent broker.
If you had tenants, they would buy insurance for the contents of their apartment, right? Maybe you will have to set up the business so that the business "rents" from you, and then you can get a separate renters policy which the business can pay for.
AIf the business is not run out of your primary residence it probably won't qualify as a home-based business for insurance purposes.
What kind of quotes have you been getting? We only paid about $500/year for $2M liability on our bakery business run out of a commercial kitchen in CA.
We were quoted a little over $1500 a year, with a guess of $10000 on supplies inside the house. The house is 800 sq. feet, in a town with 500 people. Seemed ridiculous! We have been working with an independent agent and he says that is the best they can do. The house is over 110 years old, so I don't know if that is hurting me on price. Some of the stuff we have been hearing back is this:
"I talked to the underwriter and they can't write the home with that kind of
business in it. The business company wants a professional oven to write it
that way so I can't help."
"This quote includes the structure (home) , garage, business property and liability, business interruption and more"
I don't even know what business interruption is! HA! The deductible is at $2500. Am I wording it wrong to them? Is there a better way to say or do what I want to do without such a steep premium? I am just planning on baking and delivering from there.
Thanks again all!
AYou may want to request a list of all the individual line items the policy covers, it sounds like it is a combination homeowners and business liability policy, so $1500 might not be that far off if the homeowners portion is $1000 (which is possible given the age of the house).
I would definitely call other insurance companies to get competing quotes though. I'm not sure if you can do this, but getting a rider to cover business liability on either the homeowners or the umbrella policy might be another solution.
Regarding the professional oven, you may need one anyway in order to pass a health inspection.
"Business interruption" is for the $$$ you lose when (for example) a flood or a tree down onto the roof stops you from baking cakes. Useful stuff if your primary income is the baking business.
Ask HOW MUCH liability. Liability would be important if you hire somebody or if you have a lot of people coming to pick up orders. You should also carry liability if you rent this second house to tenants.
House over 10 years old usually means a better rate on the basic insurance.