Did you know this? Sellers who sell from home should read this!

[k1ooo-slr-sales]

I was reading stories on the ABC News website when I came across one that eBay sellers who sell from home should read.  It is not a story about an eBay seller, but the gist of the story would affect a lot of eBay sellers.

https://www.abc.net.au/news/2022-07-06/couple-denied-aami-home-insurance-claim-after-selling-eggs/10...

So, it seems that if you run a ‘business’ from home, and don’t declare that to your home insurance provider, you may be denied a claim if your house burns down!

I know that many “mum & dad” eBay sellers will say that they are not running a business, but a quick visit to the ATO website might be advisable (links in spoiler).

Spoiler

These two ATO pages are very important for a number of reasons.  One is that it will help sellers decided whether to declare their eBay activity at tax time, the other is that this might help in deciding whether an insurance company might deem your eBay activity is businesslike.

https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/are-you-in-busines...

https://www.ato.gov.au/Business/Starting-your-own-business/In-detail/Online-selling---hobby-or-busin...

We all know, or should know, that insurance companies don’t like to pay out to policy holders . . . especially in cases of total loss on things like building insurance.

I will admit that when I started selling cameras on eBay I thought of it as a hobby activity, I even talked about it with my tax accountant.  I was told my early selling was hobbylike, but after a while I started rethinking my eBay activity when I had some Vistaprint business cards made up and opened a NAB savings account for just my eBay buying and selling.  That’s why I stopped selling until I retired from work.  My selling activity falls well below the tax-free threshold, but could likely still be considered businesslike.

Some things that may indicate you are a business include:

- if you buy stuff with the intention to re-sell that on eBay, including buying from eBay, Vinnies, Op Shops, markets or garage sales.

- if you sell stuff for more than it cost you

- if your selling activity is organised and/or repetitive

- if you keep records of your selling activity, including breakdown of costs, postage, fees etc

- having a bank account for your selling activity

- if your activity is “businesslike”, including having a business card that you include with your sold items when shipped

So, if you think that there might just be that little chance that your eBay selling activity might be considered businesslike it might be worthwhile checking with your home insurance provider to ensure you are covered!

[domino-710]

Just a question ??

How would my insurance co. know anything of my banking habits.

My ' collections ' - which could be stated as contents - same as jewellery - artworks etc.

How do my earnings come into an insurance claim - say for - leaks - damage - the shebang burned.

[imastawka]

But it's one of the questions insurance providers ask when completing your form.

Is this premises used for business activities?

It's on Home and Contents Insurance  AFAIK

Do people not read everything..................oh, my bad, no, they don't!

[domino-710]

When in business I always had a home office - which was declared - and claimed as a business expense.

Where does my insurance co - have anything to do with this. ??

[k1ooo-slr-sales]

I only quoted from the ATO site to show how the ATO determine whether someone’s activity is a hobby or business as a guide to how insurance companies might make a similar determination.

Insurance companies may have their own criteria to determine whether an insured property is being used for business activity . . . but I imagine they may use similar criteria to that as the ATO.  I feel sure they would as it would lend support to their claim denial if they were to say “but the ATO would consider that as business activity”.

I would think that having a room, or space, set aside as a ‘home office’ might just be enough to want clarification from an insurance company, especially if claimed on tax returns.

The sort of searches companies can make these days would mean that they could easily find out about undeclared activity.  By ‘undeclared’ I mean not declared when taking out or renewing a home building policy.  Insurance companies often rely on the policy holder’s duty of disclosure, that which the insurer ought to be told.

dom, do you have home building insurance?  Might be worth a phone call to your insurer.  If you don’t think that is necessary then that is ok, don’t make the call.

[k1ooo-slr-sales]

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@domino-710 wrote:

When in business I always had a home office - which was declared - and claimed as a business expense.

Where does my insurance co - have anything to do with this. ??

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they are the provider of the insurance, and they provide that insurance based on policy holders answering a questionnaire fully and honestly while disclosing anything the insurer ought to be told about that would influence the cover they are prepared to offer . . . in the case of the egg seller that would be their egg selling activities.

[jellybirddesigns]

I read this article today as well and I'm pleased to see that these people are being represented by lawyers who say that having a business like this is an irrelevant factor to the insurer and did not contribute in any way to the fire. In fact, the hens were several hundred yards away from the insured building. Far too many insurers rely on insignificant information when assessing claims.

[countessalmirena · Accepted solution]

k1ooo, I read that article as well. The egg-selling activity strikes me such a ridiculous reason to deny an insurance payout... It's clear that none of the activity involved in that caused uninsurable risk. But insurance companies will use any reason or excuse to avoid paying out, and they'll investigate upon a claim being made (not before, because of course they do want to receive policies payments and the onus is on the policy holder to disclose relevant information).

Strictly speaking, I would suppose it is business activity. We so often give the warning of caveat emptor; we'll need to say caveat venditor as well.

There are legitimate causes for concern with some instances of undeclared business activity... To give a ludicrous example, cannabis-growing and selling the product at the gate or front door or from the boot of the car... That's an obvious one, with an obvious risk.

It can't only be the perceived risk, though; it must be to do with business insurance being a different kettle of fish from home & contents insurance.

[domino-710]

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@k1ooo-slr-sales wrote:

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@domino-710 wrote:

When in business I always had a home office - which was declared - and claimed as a business expense.

Where does my insurance co - have anything to do with this. ??

---

they are the provider of the insurance, and they provide that insurance based on policy holders answering a questionnaire fully and honestly while disclosing anything the insurer ought to be told about that would influence the cover they are prepared to offer . . . in the case of the egg seller that would be their egg selling activities.

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When I stated ' declared ' - it was ticked - also claimed on tax.

[imastawka · Accepted solution]

I notice in the article that the couple were renovating the house.

My house policy says I have to inform them of any renovations that I'm doing in case something happens.

If I don't inform them of renovations, and then the house burns down, I'm not covered.

This might also have been a problem for the couple and their insurance

♪♫ Lucky they're with AAMI ♫♪