Insurance news and information

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[technorati code wdzjeyt7n4]  Are your work-at-home unit owners creating an insurance gap for your association? What seems like an innocuous issue could be a major deal breaker for your insurer. That’s because most policies state that units are for residential purposes only. Some go so far as to prohibit business operations of any kind in the units. Tell that to the freelance writer or the Internet auctioneer living on association property.

As home-based businesses grow in number, there will be more people working from home. As a result, insurance policies will be challenged should any claims arise as a direct result of the home-based business. You as condo association members must determine the extent to which you will address a telecommuting unit owner. In most cases, insurers expect condo associations to exercise good business judgment.

For instance, not all home-based businesses pose a risk to the condo association insurance coverage. Condo associations should ask the following: How big is the risk based on the unit owner’s business? Are clients visiting the property? Is there a nuisance factor, such as excess noise, traffic, deliveries, or late-night phone calls/faxes that may be heard in other units? Is the unit owner manufacturing items in the unit?

Many condo associations see restrictive covenants as hard-and-fast rules that must be applied in all cases. Not so. There are exceptions that any condo association would be hard pressed to argue against. Does this restriction include babysitting or pet-sitting? If so, this could negatively impact a number of unit owners and disrupt their residential experience. Condo association boards should stop to consider exactly what impact this telecommuting activity has on the community as a whole. Obviously you’re not going to want a manufacturing business grinding away at all hours from unit 4B. But a freelance writer to run a writing and editing business that doesn’t receive visitors is one activity that will not disturb the residential feel.

A sensible approach is needed when it comes to allowing or restricting telecommuting or home based business activities. Check with your condo association insurance carrier to get the policy wording on home-based businesses, and discuss with your broker the different situations in which home-based business could be conducted without voiding coverage.

Another thing to know is that personal homeowner or tenant policies may have restrictions related to home based business as well. Tenants who telecommute or have a home based business should talk with their insurance agent for any exclusions in their policy before there is a claim.  It’s better to be prepared than to be surprised by a lack of coverage.