Anne Arundel Homeowners May Be Creating an Insurance Gap Without Realizing It

Anne Arundel Homeowners Could Have an Insurance Gap in Their Backyard

Remote work and side businesses have changed how many Anne Arundel County residents use their property.

Detached garages, workshops, sheds, and backyard offices are no longer just storage spaces. From Severna Park and Arnold to Crofton and Pasadena, many residents now use these structures to run businesses, store inventory, or work remotely.

What many people don't realize is that using a detached structure for business purposes can create insurance issues that may not be obvious until after a loss occurs.

When a Shed Becomes More Than a Shed

Most homeowners insurance policies provide coverage for detached structures such as garages, sheds, and workshops. However, that coverage is generally designed for personal use.

Problems can arise when a structure is used for business activities.

Examples include:

• A contractor storing tools and equipment in a detached garage
• An online seller keeping inventory in a backyard shed
• A photographer using a detached studio
• A woodworking business operating from a workshop
• A consultant meeting clients in a backyard office

In each case, the homeowner may be introducing business-related exposures that were never contemplated when the homeowners policy was purchased.

Why Business Use Matters

Insurance companies evaluate risk differently when a structure is used for business purposes. While a detached garage used to park a family vehicle presents one level of risk, a garage filled with commercial equipment, inventory, or customer traffic presents another.

Depending on the situation, homeowners may encounter limitations involving:

• Business property coverage
• Liability protection
• Equipment and tool coverage
• Inventory protection
• Customer injuries occurring on the property

Many homeowners are surprised to learn that simply having coverage for the structure itself does not automatically mean everything associated with a business operation is fully insured.

The Rise of Home-Based Businesses

The growth of remote work and entrepreneurship has made these situations increasingly common. Many small businesses start in a spare room, garage, workshop, or detached office before eventually moving into commercial space.

Unfortunately, insurance coverage often fails to keep pace with these changes.

A homeowner may add expensive equipment, begin storing inventory, or start serving customers without ever notifying their insurance company. Years later, they may assume they are protected when significant coverage gaps actually exist.

Questions Homeowners Should Ask

If you use a detached structure for any business activity, consider these questions:

• Is the structure being used strictly for personal purposes?
• Are tools, equipment, or inventory stored there?
• Do customers ever visit the property?
• Has the value of business property increased over time?
• Has your insurance company been informed about the business use?

The answers can help determine whether additional insurance solutions should be considered.

Don't Wait Until After a Claim

One of the most common insurance mistakes is assuming that personal insurance automatically covers business activities. In reality, coverage depends on the type of business, how the structure is used, and the specific policy language involved.

The best time to discuss these issues is before a loss occurs.

Homeowners who want a more detailed explanation of detached structure coverage and business-use considerations can read Huff Insurance's complete guide here:

https://www.huffinsurance.com/blog/detached-structure-insurance/

About The Author: Jerry Nicklow

Jerry Nicklow has worked in the insurance industry since 1995 and has written insurance marketing and educational content since 2008. He holds the API, AAI, and AIS designations from The Institutes. Jerry has appeared on insurance industry podcasts and is the creator of Real Insurance Talk, (Youtube Channel, Facebook Page and Tik Tok Page) where he explains insurance in plain terms through videos designed to help individuals and business owners better understand insurance coverage and risk management.

Learn more about Jerry Nicklow at https://www.huffinsurance.com/about-us/jerry-nicklow/