Dartmouth Home-Based Entrepreneurs Lose Insurance Because They Were Too Successful
DARTMOUTH – There has been a surge in home-based businesses during the Covid-19 pandemic – among them Allen Pooley and his wife Kelly Keating of Dartmouth Nova Scotia. In October of 2020, they set up at home with Darn Yarn, an e-commerce store that sells knitting supplies throughout North America.
The couple quickly found success in their new venture because so many people, it appears, took up knitting and crafts during the pandemic. Many customers were in places like retirement homes that were in lockdown, which made online ordering appealing to them.
“(Business) has been really good; the timing worked out with the pandemic,” said Pooley. “We’ve seen a huge uptake in Ontario and Alberta; we’re shipping across Canada and the US. So, we’re being a lifeline to some people.”
In May of 2021, with their business still surging, Pooley and Keating decided to get business insurance. While getting their business insured through a broker, the two were told it would be wise to inform their home insurance company, Allstate, that they were operating a business from home.
In June, after getting Darn Yarn insured, Pooley made the call to Allstate Insurance about their business, expecting to have no issues.
Pooley and Keating have had their home and auto insurance through Allstate for many years and were always satisfied with their service. They even once had an incident with a pipe in their home in which they submitted a claim and say the insurance company was very helpful.
But days after informing the company of the home-based business, they were told that Allstate would no longer be interested in providing coverage for their home. According to Pooley, Allstate told him he can voluntarily cancel the home insurance coverage, or it would be terminated, which would look worse on his insurance records.
“I had it explained to me that it was sort of like closing a credit card account as opposed to having your bank close your credit card on you,” says Pooley.
“Honestly, they’ve always taken really good care of us. That’s a part of why it was such a shocker,” said Pooley.
For Pooley, it was also a confusing decision. Why did operating an online yarn store make him too big of a home insurance risk? He claims there was no real explanation over the phone and, at first, Allstate refused to give an explanation in writing. Eventually, however, he did get a written explanation.
In an email to Pooley, an agency manager for Allstate was apologetic for the confusion over the cancellation. The email went on to explain that Allstate was cancelling the home insurance because Darn Yarn sold their product outside of Canada.
“It’s just not the type of insurance we are set up to handle… we just don’t have the (insurance) product to properly insure anyone who does business outside of the country.”
Pooley remains confused about Allstate’s reasoning for cancelling his home insurance. Darn Yarn has business insurance separate from home insurance, which should cover the risks associated with that business. According to Pooley, there is nothing about distributing and selling yarn that should increase the risk to his home.
“The only explanation I got is they’re uncomfortable with the risk,” says Pooley. “There should, to my knowledge, have been no extra risk to Allstate. But they haven’t been able to explain to me what the risk is.”
Huddle reached out to Allstate Insurance for further explanation. In their first emailed response, the company claimed that it was Darn Yarn’s “great success” that led to the cancellation of home insurance.
“Allstate strives to provide great customer service, and regrettably, in this instance, given the great success of the customer’s business, he no longer qualified for our home insurance product as the revenues from his home business exceeded our product threshold,” a spokesperson wrote in the email.
Huddle sent a follow-up email asking for clarification on why the success of Darn Yarn led to the cancellation of home insurance. The response didn’t shed any new light on the subject.
“Our home insurance product has a home business revenue limit of $125,000 which was exceeded in this instance,” read the one-line response.
Pooley and Keating now have home insurance with a new provider but are paying 30-40 percent more for the coverage. For now, they still have auto insurance with Allstate but are considering moving that coverage to somewhere else as well.
Pooley is now warning fellow home business owners to check with their insurance companies, to make sure their ventures don’t make coverage null and void.
“If anyone has a home-based business, check and make sure they’re on the right side of things,” he says.