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!

[countessalmirena]

AAMI shmami, I suppose.

Insurance companies make huge profits based on the expectation that most of the time, they won't have to pay their clients anything... or at least that their outgoings are far far less than their incomings.

[k1ooo-slr-sales]

I went to the AAMI website (because that is the insurer in the story) to look around at information they have.

I found a couple of places where they clearly articulate the duty of disclosure that policy holders have.  I took some screengrabs which I have put into spoilers so as to not make this a lengthy post.

Spoiler

**  When you click to apply for a quote for home insurance you are asked your name before proceeding to Step 1 of 5 (I used a false name at this point, although there are posters/readers on these boards who would have no problem thinking the name I used is my real name  🤣 , go figure)  **


——————————-

In the Product Disclosure Statement there are these important bits:




and this definition of “Business activity” on page 104:



So, any eBay seller who is selling to make an income is considered as having business activity at the insured premises and would be required to notify AAMI (I would imagine that other insurance providers have similar requirements)

For AAMI policy holders, any eBay seller who is selling to make an income is considered as having business activity at the insured premises and would be required to notify AAMI (I would imagine that other insurance providers have similar requirements).  Failing to do so may void your policy.

If you have declared your selling activity to the ATO because proceeds from your selling can be can be considered ‘income’ then this insurance requirement applies to you.

[k1ooo-slr-sales]

I started this thread just to alert eBay sellers that there may be insurance implications stemming from selling from home, NOT to argue the merits of the egg seller’s predicament or the personal circumstances of any poster here.

In the story there is also this info:

An AAMI spokesman said the couple's business was not the same as a lemonade stand and they had a registered ABN, signage, and a Facebook page for the business.

Ms Uluca*  said there was "no part of the hobby egg farm business that caused or contributed to the fire" and she was concerned other home insurance holders might be caught out in a similar way if a natural disaster hit their property.

(*Hayriye Uluca, a principal lawyer from Maurice Blackburn)

Clearly, there is more to this story than egg selling being a business.  Nobody gets an ABN to sell eggs at their front gate.

[imastawka]

I'm still saying it's a double whammy for this couple.

Gives the insurance co another reason to deny - undertaking repair work

See the last paragraph, below the one you pointed out with red (crayon) arrows

You can't win with insurance companies

[k1ooo-slr-sales]

---

@imastawka wrote:

I'm still saying it's a double whammy for this couple.

Gives the insurance co another reason to deny - undertaking repair work

See the last paragraph, below the one you pointed out with red (crayon) arrows

You can't win with insurance companies

---

I read that line as meaning business activity like repairing cars or electrical goods on premises and not having home repairs or renovations done.

I agree that you can’t win with insurance companies.  Just need to see the flood vs inundation arguments.

[imastawka]

Interpretation of that phrase, then?   Fair enough.

They still want to know if you are doing any renovations - any insurer wants to know that.

I'll let the bone go now      hehe 

This thread is, after all, about operating a business at home and the insurance implications.

[p9games]

This really should not be news to anybody.

Home contents insurance covers you up to the insured value for general contents.  You don't have to list out every pillow case, pot, pan and candlestick you own.  You pay a premium based on the insured value

However valuable collections are ALWAYS listed out and insured separately.  You have a PS5 with 100 games you need to list it.  Display shelf of new in box star wars figurines, you need to list it out.  Valuable artworks, jewelry, substantial collection of vintage vinyl records, whatever it is you need to list it out and insure it as a 'collection' which is separate to the lump sum your contents covers you.

An inventory of items that are being sold on Ebay is no different.  Whether or not you are a registered company or business, above or below the tax free threshhold.  If you have a collection of items that are valuable and are not typically found in a home (like furniture, linen, clothes, pots and pans) you generally need to insure it separately.

[imastawka]

Thousands of people with side businesses could have the wrong home insurance, experts say (msn.com)

[eol-products]

My storage unit insurance is cheap but if you look at the rent cost per month as well it doesn't seam so bad after all. 

[k1ooo-slr-sales]

(same story but on ABC website)

https://amp.abc.net.au/article/101246862