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Hobby or Business – Part One

Please also see Hobby or Business – Part 2.

Did you know that your hobby may significantly affect your insurance needs? They often require a large investment in tangible property and may even create some legal responsibility to other persons or their property.

Hobbyists: Collectors or Enthusiasts

Hobbies typically involve either collectors or enthusiasts. A collector acquires property that especially attracts him or her. Examples include people who collect stamps, art, coins, autos, antiques, comic books, baskets, dishes, glassware, sports memorabilia, etc. An enthusiast also collects a certain type of property. However, the enthusiast acquires property in order to pursue a given, physical (particularly sporting or artistic) activity. Examples are hunters, musicians, painters, sculptors, cyclists, and enthusiasts of many types, such as fans of model or radio control planes, helicopters, etc.

With collectors, the focus should be placed on the nature of the property being acquired. With enthusiasts, besides attention to the property exposure, there should be equal emphasis on the liability exposure that is inherent in their activity.

Property Coverage Needs Created By Your Hobby

Your special property should be properly insured. Most homeowner policies provide minimal protection for collectible property. Why? Items such as coins, stamps, antiques, guns, etc., are often fragile. Also, such property is very valuable in relation to its size. The value of collectibles kept in one room may be more valuable than all of the rest of your home's contents. Regular homeowner coverage is not designed to handle high-valued property that is easily destroyed, lost or is vulnerable to theft.

Even when collectible property is eligible for a policy's full coverage, this may not be enough. You may want your special property to be covered from more causes of loss than your family room couch. It may be worthwhile to buy an endorsement to add additional coverage for your collectibles to your homeowner policy. Depending upon the type and value of your collectibles, you may even have to consider specialty coverage which typically makes consideration for replacement cost and for property that appreciates in value.

Liability Coverage Needs Created By Your Hobby

If your hobby is more hands-on, then be sure you're protected against any legal liability related to your activity. Ask yourself the following:

Are there any dangers associated with the hobby?
Does the hobby involve frequent travel to sites or meets?
Does the activity attract frequent visitors to your home?
Do you publish hobbyist newsletters or give advice to others?
Do you actively sell or trade property on or away from your home?
Does your activity involve equipment that's inherently dangerous to others?

Get Serious About Protecting Your Hobby

Fortunately, many aspects of a hobby, especially legal liability, are covered by a homeowners policy. However, your activity may need special or even business coverage (see part 2 of this series). The way you spend your leisure time should be a happy diversion. Don't let your enjoyment be interrupted by inadequate protection. Discuss your special interest with an insurance professional who has a special interest in meeting your coverage needs.

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