When he called, we explained the starting limits of the policy and then asked if those limits would be reasonable for him. He advised us that he needed more coverage than that, and asked what $50,000 of personal property coverage might cost.
We updated the numbers, gave him the price, and he asked us to email him a quote. In order to do that, of course, we needed to collect his email address for obvious reasons. His email was something like “BigJimProd@example.org”.
One of the ways that Effective Coverage helps to make sure that you have the correct coverage is by ensuring that everyone you work with has a basic understanding of the underwriting process and a basic understanding of the claims process. That entails thinking like and underwriter, and thinking like a claims adjuster, while also thinking like an agent.
That email address alone caused our agent to ask a question that changed the conversation completely. Do you know what the question was? If you’re a DJ – part time or otherwise – you probably do. If you’re not, and you don’t work in related fields, you might be wondering.
How much of the fifty thousand dollars of personal property coverage you’re looking for is intended to cover your business equipment?
Huh? How did we get to a conversation about does renters insurance cover my equipment just from an email address? We should note that the amount of personal property coverage the insured was looking for was a bit above the average for the area, but not so much that the amount of coverage was notable in and of itself. However, combined with the email and one casual question, the conversation was turned in an entirely different direction.
An email like BigJimProd@example.org likely belongs to a guy who goes by Big Jim, of course. That’s common sense. But it’s also telling about what Big Jim does for a living. “Prod” in the email was just a shortened version of “productions.” Big Jim therefore is likely engaged at least tangentially in the music business in some way. That caused our agent to ask Mr. Big Jim what he was looking to cover.
Jim’s response was that about half the desired coverage amount was intended to cover various types of music production equipment. Turntables, speakers, cables, and a wide variety of other things, most of which were quite expensive. That made sense, because the remaining half of the personal property coverage he was looking for was actually slightly less than the average for his area.
You see, Big Jim wasn’t looking for excess coverage so he could make a big claim. He was looking to cover business equipment. His next question was,
Does my renters insurance cover my equipment? I use that BigJimProd as a brand and as my email, but I use my personal cell phone and my personal vehicle for the business and I just claim the money on my personal taxes. I’m not actually in business, I don’t have an LLC or anything. Does it matter?
First things first, we don’t ask these questions because insurance companies want to be creepy and know absolutely everything about you. We ask these questions because we want to help you get the right kind of coverage and the right amount of coverage to meet the needs of what you’re trying to protect. We’re not making notes, we’re trying to understand the property and the risks that you’re concerned about because insurance policies are very precisely worded as to what they will and will not cover.
Does My Renters Insurance Cover My Equipment?
You may assume that the answer is always no. Some policies may offer token coverage of a thousand dollars or so for business equipment, but that’s not on every policy. If it’s business equipment, it needs a separate policy to cover it. That’s because the set of risks that Philadelphia Renters Insurance contemplates on a boilerplate HO-4 policy form is specific and designed to protect personal property belonging to individuals.
Does your business equipment need protection from the weight of snow and ice? Maybe, maybe not, but that’s an example of a peril in the policy that’s intended for personal property belonging to an individual person. The risks of a commercial policy are entirely different. They’re priced differently, they’re designed differently, they’re sold differently, and they’re underwritten differently. Claims are handled differently, as well. If a loss to business property happened, and the check was made out to the individual insured? There would be a moral hazard in the temptation to cash the check instead of giving it to the business.
What If I’m Not A Business, I Just Have A Brand? Does Renters Insurance Cover My Equipment?
Personal branding is absolutely a thing in the modern world, no doubt. But personal branding is done for business reasons, usually if you as a person are the primary asset of the business. If you’re a marketing consultant and you work on a contract basis for companies, your brand is pretty important. The same goes if you’re a DJ and you want people to know who you are and book you, or if you’re in any way tied to music production or entertainment. The brand is crucial.
But the brand isn’t what makes you a business. You could decide to brand yourself so you can DJ your friend’s wedding as a one-shot deal for free. You’re not making money off it, you’re not engaging in any business pursuits, and maybe you’re an accountant in your day to day life. You’re not a DJ, and that’s not a business pursuit.
What makes you a business is that you’re trying to make money off it. The threshold in a standard renters insurance policy is extremely low – sometimes less than a thousand dollars a year in income or holding yourself out as a professional in whatever that field is. If you’re good with a camera and you hold yourself out as a photographer, you might not have coverage for the equipment when you’re taking pictures of that same wedding. That’s because you’re a professional using professional equipment, and you need the right kind of insurance for that.
As a general rule, if you have more than casual hobbyist level equipment for a profession or if you ever accept money in return for your services, product, or expertise, you’re probably engaged in business and you probably need a separate commercial policy to cover those pursuits. Usually those small commercial policies aren’t expensive, and they often come together in a bundle of other coverage you might not be aware you need if you’re engaged in a business pursuit.
You may, of course, find a singular exception to the above in your kitchen. Some people who really enjoy cooking will purchase professional level equipment of varying types, especially if they enjoy baking. That doesn’t per se mean they’re engaged in the business of cooking food for others. If they were, they’d have to have their kitchen inspected and there would otherwise be a paper trail that they were in business. But when in doubt, ask!
That’s the other thing to be aware of. A renters insurance policy is derived from the homeowners insurance policy. The homeowners insurance policy is actually a relatively recent invention, dating from about the mid twentieth century. Before that, you bought fire insurance to protect your home, and other policies to protect against specific risks. Commercial policies are bundled differently to protect against very different risks.
How do you know if your renters insurance covers your equipment? Ask! That’s what the insurance experts for renters are here for. You can call (800)892-4308 or click to get covered - whether you need Pennsylvania renters insurance quotes online or coverage anywhere else!
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Photo Credit: Aurora Mixer Aurora 224 2 Channel Open Source DJ Mixer CC BY SA 2.0