Just Hit A (Figurative) Brick Wall! (Insurance Related Rant)
Business By CookieMakinMomma Updated 10 May 2010 , 2:47pm by CookieMakinMomma
I am about 95% ready to open my home bakery here in Ohio and then suddenly my feet have been kicked out from under me. We rent our home, and when our landlord went to check with his insurance company he was informed they would cancel his policy if there was a business on the property. Sooo... now I'm stuck. Unfortunately this is the worst time of year to try and communicate with insurance companies, and to boot the agent I have been working with on liability insurance is leaving for vacation and won't be back for two weeks. Our landlord is about the nicest guy you could ever hope to meet and he is willing to help find options, but I'm still very worried. He will likely have to increase his rental insurance, assuming they offer a different policy at all, which means increasing our rent. This would be incredibly frustrating as this whole d@mn business is supposed to help us become more financially stable, not less!
Lowest blow... I had just finished designing my business logo and was staring at it while I listened to the voicemail from my landlord. Yeah, that was a bad day.
Anyway, if anyone has any advice or experience with rentals and business insurance I would greatly appreciate your insight! I refuse to roll over and give up, but I really don't know which way to turn at this point. Help!
I would think there would be a way around this.. are you going to have people come to your home for pick ups?? Maybe you should do delivery only and then only have people come for tastings.. that way maybe you can explain it to your landlord that way to the insurance company. They are worried about the people coming in and out what if something happened to them. But if you limit the number of people that come to your home that might change things. I am probably going to have this problem too.. I will be moving into a town house that we are going to rent and the way I plan to get around this is that no one will come to my home.. I will do deliveries only plus you might want to see if you can have your insurance upped to cover something like this. Did your landlord's insurance company know you are carrying your own insurance as well?
I would think there would be a way around this.. are you going to have people come to your home for pick ups?? Maybe you should do delivery only and then only have people come for tastings.. that way maybe you can explain it to your landlord that way to the insurance company. They are worried about the people coming in and out what if something happened to them. But if you limit the number of people that come to your home that might change things. I am probably going to have this problem too.. I will be moving into a town house that we are going to rent and the way I plan to get around this is that no one will come to my home.. I will do deliveries only plus you might want to see if you can have your insurance upped to cover something like this. Did your landlord's insurance company know you are carrying your own insurance as well?
Yeah I forgot to mention that. Originally I was planning limited customer pickups but I'm thinking I will have to do delivery only. I'll have to raise my minimum order significantly (I have a toddler and can't be running around for 1doz cupcakes) and it will likely affect my prices. Ohio doesn't charge tax on food items so as long as I was only charging for food I didn't have to worry about a vendors license and the rest of it. If I'm doing all delivery I may have to start charging for it based on distance to be sure I compensate myself properly. Yes, my landlord knew I was getting liability insurance but his ins. company said it didn't matter. The [expletive] people who love to sue for the smallest perceived injury go after the property owners before the business itself. Because of this I bet I couldn't even do tastings at my house (not that I really want to. Again, I have a toddler. There's no way I'm cleaning the living room five times in one day! 
) Thank you for the response! It's good to know there are other renters who have found solutions.
Anybody else have experience with running a business from a rental property? I still don't know what is going on until my landlord talks to his insurance company so I would really love to hear some "success" stories to waylay my fears in the meantime. It's very frustrating to be 95% there and then hang in limbo... 
MOST insurance companies don't like to write property insurance for homes that have businesses run from them, strictly because of the liability aspect.
It's not just walk-in traffic, or cake pickups. It's also the liability associated with possible illness, possible disgruntled customer, etc. If someone gets sick from your product, your landlord can be on the hook for it and pulled into a lawsuit
You might want to look into TWO things:
1- Obtaining a renters insurance policy with an At Home Business endorsement (if it's even available in your area)
2 - Obtaining a BOP (Business Owners Policy) or GL Policy (General Liability Policy)
It's possible that your Landlords insurance company will allow you to run the home based business IF all of YOUR exposures are covered by a Home Based Business endorsement or BOP/GL
Every insurance company is different, it's possible that his insurance company doesn't want to have anything to do it with. And if that's the case, it is what it is (unfortunately)
I hope that helps!
But if you limit the number of people that come to your home that might change things.
In my 15+ years in the insurance industry, allow me to suggest that this doesn't matter. It only takes ONE million dollar lawsuit to be a problem. If you only allowed ONE pickup and that ONE pickup fell and broke their leg on your steps, and that ONE person sued for a million dollars...... the insurance company is still on the hook.
Insurance is a game about 'risk' not about how many. You dont' get a discount if your 16 year old only drives the car twice a month as opposed to twice a day. The exposure to accidents is the same. The risk is there when the 16 yr old gets behind the wheel ... be it once or 30 times.
Customers on-site is the same risk. It only takes one.
Wow indydebi, why can you be one of my insureds?!? 
CookieMakinMomma - You need to review Ohio laws under Ohio Department of Agriculture. There is a difference between a cottage industry and a home bakery. I just reviewed them, again. I used to have licensed coffee shop/cafe in Ohio so I was familiar with health department rules. Now, I want to just do an occasional cake and no longer own my licensed commercial kitchen. As long as you don't sell any potentially hazardous foods (ie. cheesecakes), you can have a cottage industry in Ohio.
http://www.agri.ohio.gov/foodsafety/docs/CottageFoodOperation-factsheet.pdf
Thank you everyone! I really appreciate your comments. I am already looking into renters/business liability combos and other such insurance policies. I just managed to pick the worst possible time to start looking into it. The guy I was working with just went on vacation and won't be back until the 10th. I suppose I could call other places... in fact I think I will. It can't hurt and I may find someone who can work with my situation. Thank you for the tips yummy_in_my_tummy, I will ask about the BOP/GL. I have decided to go delivery only and completely eliminate customers coming to my house. It will mean more paperwork but that is preferable to not having a business to do paperwork for in the first place!
Occther- I know all about the DoA rules. I chose to be a home bakery because I will be selling out of state and I want to offer perishable icings. Having a cottage industry really wouldn't change my insurance status anyway. Thank you for your comment and concern though!
CookieMakinMama, I would recommend going to an Independent Agent and explaining your situation. Independent Agents work with multiple different insurance companies so they can shop it for you : )
Good Luck!
This is off topic, but I noticed on CookieMakinMama's website under cupcakes that instead of a picture of a carrot cake flavored cupcake there is a picture of a cookie tray.
Wasn't sure if you knew about that.
lol yes I know, thank you for noticing! I was thinking about that not five minutes ago! I left the picture there just to hold a place for carrot cake but still haven't taken a picture to replace it yet. The website is in beta form right now. With my insurance situation still (yes, still) in limbo I'm not in too big a hurry to get everything refined. I'd rather spend the time tinkering with my recipes, which is by far my favorite part!
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