Can a home insurer treat equipment that is only occasionally used in a sole proprietorship as “business” equipment to deny personal property coverage?

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Can a home insurer treat equipment that is only occasionally used in a sole proprietorship as “business” equipment to deny personal property coverage?

I was recently robbed. Insurance company is asking me to separate out items that are sometimes used for sole proprietorship. Policy states:1)”business” means any full-time, part-time or occasional activity engaged in as a trade, profession or occupation, including farming. 2) Max $2500 for Property pertaining to a business actually conducted on the residence premises, including property in storage, held as samples, or held for sale or delivery after sale. Internet says: All assets of the sole proprietorship are owned by the owner as personal property. So should these items be covered?

Asked on February 8, 2011 under Insurance Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It is true that all assets of a sole proprietor are owned by sole proprietor: that's because there is no separate legal entity to own them. However, that definition is irrelevant to insurance coverage if the policy has specific terms addressing this property or this situation. An insurance policy is a contract; it provides that coverage--no more and no less--defined in the policy. If the policy says that there is maximum coverage of $2,500 for property pertaining to a business conducted on the residential premises, whether part time or occasionally, then that is the limit of coverage; general legal principals or definitions do not override the specific terms of an insurance policy.


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