Have license, know just enough to be dangerous... help pls :)

[Grammy Lor]

Hello you all knowing agents!

Believe it or not, I have my LAH & PC licenses here in PA. However, its not my job, so as above, I only know enough to be dangerous!! (I do come here often and just read posts to learn, you are all so helpful!!)

Howeverrrrr.... My question here is as the client, not an agent. I have my regular home and another older farmhouse on the same street. For the last 2 years Ive been working out of the farmhouse and my business pays me rent.

My commercial agent has us with a BOP that includes all the business liability coverage that I dont think I need because I pay A TON in business insurance separately and only use the home as an office area for myself. No customers/no employees here.

Anyway..... do I actually need a commercial policy on the second (farmhouse) or just a personal lines policy. She said she quoted the personal lines and the premiums are more than my BOP that I currently have on it. Does this sound right?

God, I hope this made sense!! If this kind of question is not allowed, please forgive me, let me know and I will delete.

Thanks so much for anyyyy help here!!

Grammy

 

[marindependent]

Its unclear to me after reading this, which is what:
1. You have Farmhouse that is used for business puposes only and has a commercial policy. "working out of the farmhouse and my business pays me rent"
2. Another home that is not used for business but that is also used on a commercial policy? How is this policy used?

 

[Grammy Lor]

Sorry, I know that had to be confusing!

I have 2 homes on the same street.
One that I live in.
The other, an old farmhouse, I use just to work from (Myself in office).

When getting the insurance on the farmhouse, my agent wrote a BOP, which includes the liability for my business.

BUT I already have full coverage for my business separately.

I thought I should just have a homeowners policy on the farmhouse and I can add it to my regular business insurance just as I did when I rented from a landlord elsewhere.

I hope this is a little more clear? ugh..sorry.

 

[adjusterjack]

Still needs clarification.

Farmhouse down the street? On a separate property that has its own property address and parcel number? Or is it located on the same property address and parcel number as your house?

You own the farmhouse as an individual? Joe Farmhouse Owner?

You operate the business as a business entity like XYZ Widgets and XYZ Widgets pays rent to Joe Farmhouse Owner?

What kind of business operations take place in the farmhouse?

The BOP that your agent wrote. Is it under the business name?

The "full coverage for my business separately" is under what name? Yours as an individual or something else.

The following may change depending on the answers to ALL of the above but preliminarily my impression is this.

You need a business policy under the name of the business that covers business contents and business liability. The business is a tenant so the building doesn't have to be covered under that policy.

You need fire and liability insurance on the building under your name as owner and lessor. Whether you can do it on a dwelling policy or a commercial policy depends on the occupancy. and the insurance underwriter.

Having the business pay you rent is cumbersome because you are two entities. You and the business. What is your reasoning for that?

The business income and expenses are addressed on IRS Schedule C and the rental income and expenses are addressed on IRS Schedule E. Two entities - two policies, in addition to your homeowners.

If you operated as Joe Farmhouse Owner DBA XYZ Widgets you would need one policy, probably just the BOP, on the building, the business contents, and the business liability. And then everything gets reported on IRS Schedule C.

Go ahead and answer all my questions and I'll see if my comments need tweaking.