Permitted incidental occupancies endorsement is one of the more obscure and confusing endorsements that a homeowner may have the ability to add to their policy. This endorsement is typically relevant only to those that have a home-based business. Those with home-based businesses may find this endorsement to be quite important to be fully covered for damages or injuries that may occur.
This endorsement is typically recommended only for small businesses that don’t have many employees and don’t use complex equipment. Keep reading this article to find out if this coverage is a good fit for your situation.
- A permitted incidental occupancy endorsement can increase the amount of business property coverage in a home insurance policy to protect the homeowner from damages or injuries that may be caused due to business-related activities at the home.
- Permitted incidental occupancy endorsements will cover business property that is on the homeowner’s property.
- Permitted incidental occupancy endorsements will protect the homeowner from any personal liability that may arise from an injury to someone on the property as a result of a business-related activity.
What is a permitted incidental occupancy endorsement?
A permitted incidental occupancy endorsement is additional coverage that is typically available to homeowners purchasing home insurance. This coverage essentially provides protection to a homeowner for home-based businesses and the property of those businesses that may be on the property. Standard home insurance policies usually include a very small amount of home-based-business coverage, normally in the range of about $2,500. This coverage importantly does not cover the homeowner for personal liability that may arise as part of a business-related activity. For some homeowners with home-based businesses, this may be fine, but for most adding a permitted incidental occupancy endorsement can be crucial to having full protection for any scenario that may occur. The standard home insurance policy may also exclude business property that is located in a structure that is not the home and possibly the entire other structure as well.
This endorsement increases that small coverage limit to a more reasonable higher dollar amount and brings in liability protection for the business as well as coverage for property of the business that is on the property and possibly stored in a structure that is not the home, like a shed or detached garage.
The amount of coverage a homeowner may be able to get with this endorsement and the cost of the endorsement may depend on the nature of the business and what part of the property the business takes place. An important side note is that the person who is insured on the home insurance policy is the only person who is covered by this endorsement. A friend or distantly related family member’s business and business property will not be covered.
When is a permitted incidental occupancy endorsement right for me?
The homeowner who would be the perfect fit to add a permitted incidental occupancy endorsement to their home insurance would be a homeowner who has a relatively small business that is running out of a home office or studio. A small home business that is mostly done via computer or other technology and doesn’t use much equipment and doesn’t have many employees is a home business that would make the most sense to insure through this endorsement.
Larger businesses which may have a few employees or generate a significant amount of revenue will most likely not be able to be covered under this endorsement. In this case, the homeowner will probably have to look at a separate commercial insurance policy. Even homeowners who have a business that would make sense to insure through a permitted incidental occupancy endorsement should look at coverage limits offered on the endorsement by different insurance providers. Limits can differ and some home businesses generate more revenue or require more equipment than others leading to a different insurance coverage need and factors for the insurance company to take into account.
Typically, home businesses that involve the policyholder installing or repairing something on another property will not be covered under a permitted incidental occupancy endorsement because insurance companies don’t want to open themselves up to the liability of being responsible for an installation or repair going wrong on another property. This risk would present itself if the endorsement was added on to a standard home insurance policy. Insurance companies are also very hesitant to insure a home business that involves many people coming to the home itself or businesses that involve growing things or using a personal vehicle such as a car for business purposes. As you can see there are many instances where this endorsement will not be relevant, but there are still many instances where this endorsement is crucial.
It is encouraged for a homeowner with a home business to talk with their insurance agent to determine if this endorsement or another option would be the best route to go to cover the home and the home business to the fullest extent possible.
What is the cost of a permitted incidental occupancy endorsement?
Normally the cost of a permitted incidental occupancy endorsement is quite low. On average the endorsement adds ten to 20 dollars per month in premium cost or a couple hundred dollars a year in total. Of course, the more coverage you get the more cost that will add. There are a number of factors including the nature of the business that can affect the premium cost of the endorsement. It is important to keep in mind that even with this endorsement the home business may only be covered up to about $10,000. This may not be enough coverage for you and your home business, in which case other separate business-related policies would make more sense to purchase.
Summary
A permitted incidental occupancy endorsement is an important add-on coverage for homeowners with a small home-based business that typically involves just the homeowner and is done via small tools or a laptop. Standard home insurance policies provide very little coverage for home-based businesses and may actually exclude damage related to the home business that may have normally been covered under the policy. Talk with your insurance agent if you have a home business to see how you can keep your home fully protect and protect your business as well.
