As more Americans turn spare bedrooms into studios, garages into workshops, and dining tables into desks, one important question often gets overlooked: Does your insurance actually cover your home-based business?
The answer might surprise you.
If you're running a business from home – whether you're a freelance graphic designer, an online shop owner, or a pet groomer – assuming your homeowners policy has you fully protected is a risky bet. Standard homeowners insurance often offers limited or no coverage for business-related activities. That means your hard-earned equipment, your inventory, and even your liability could be exposed in the event of an accident, theft, or lawsuit.
Here's what you need to know about protecting your home-based business—and your peace of mind.
WHY HOMEOWNERS INSURANCE ALONE MAY NOT CUT IT
Homeowners insurance is designed to protect your personal property and liability. It generally doesn't account for the unique risks that come with operating a business. Most standard policies will have strict limits on coverage for business property, often just $2,500, and that might not cover the full value of a laptop, printer, and specialized tools or inventory.
Most homeowners policies won't cover business-related liability claims – say, if a client slips on your porch or a product you sell causes harm. So, if your business relies on costly equipment, stores inventory, or interacts with customers at your home, the stakes are higher than you might think.
WHAT COUNTS AS A HOME-BASED BUSINESS?
Before you assume your side hustle is too small to worry about, it's worth understanding what insurers consider a "business." Generally, any activity that earns money – even part-time or seasonal income – can be considered a business. That includes:
- Etsy shops or online boutiques
- Consulting, coaching, or freelance services
- Photography or videography
- Daycare or tutoring services
- Dog grooming or pet sitting
- Accounting or tax prep from home
Even if your income is modest, the liability and property risks are real. And if you file a claim under your homeowners policy for something business-related, it could be denied – or worse, your policy could be canceled for not disclosing a commercial activity.
3 INSURANCE OPTIONS FOR HOME-BASED BUSINESSES
Depending on the size and scope of your business, there are a few ways to bridge the coverage gap:
1. Homeowners Policy Endorsement (Rider)
If your business is relatively low-risk and you don't meet clients at home, you can add a simple rider to your homeowners policy. This endorsement can increase the coverage limits for business property and, in some cases, add limited liability protection. This is a good fit for freelancers or remote workers needing extra coverage for electronics or work-related materials.
2. In-Home Business Policy
This is a more robust option for people running a full-fledged business from home. It typically includes:
- Higher business property limits
- General liability coverage
- Loss of income protection if you're unable to work due to a covered event
- Some coverage for client or delivery driver injuries on your property
This is a smart option for service providers interacting with customers or storing significant inventory or equipment at home.
3. Business Owner's Policy (BOP)
A Business Owner's Policy might be the best solution if your home-based business is growing fast or has more complex needs. A BOP combines several essential coverages into one bundle, including:
- Business property insurance
- General liability insurance
- Business interruption coverage
- Optional coverages like cyber liability or commercial auto
This is typically the choice for more established businesses or those with multiple employees or contractors.
QUESTIONS TO ASK YOUR INSURANCE AGENT
Not sure what kind of coverage is right for you? Start by asking your insurance agent the following:
- Does my current homeowners policy offer any business coverage?
- What is the limit on business property under my current policy?
- What happens if a customer is injured on my property?
- Can I add an endorsement to my existing policy, or do I need separate coverage?
- What are the options for liability, cyber, or loss of income coverage?
An experienced agent – like the licensed professionals at SimplyIOA – can help you compare options and tailor a solution that fits both your business and your budget.
3 REAL-WORLD RISKS TO CONSIDER
Still unsure if it's worth the extra coverage? Consider these scenarios:
1. A photographer's camera gear is stolen from a home studio. The replacement cost is $5,000, but the homeowners policy only covers $2,500 for business property.
2. A baking business has a kitchen fire, causing damage to both home and business equipment. The insurer denies the claim because the fire originated from a commercial activity.
3. A client trips on icy steps while coming to pick up a custom wreath order. The business owner is sued, but their homeowners policy doesn't cover the injury because it occurred during a business visit.
Whether you're operating a full-scale company or nurturing a side hustle, your home-based business deserves the same level of protection as any other. Ignoring the insurance gap could cost you far more in the long run.
At SimplyIOA, we make it easy to compare personalized coverage options and get expert advice. Don't wait until something goes wrong; reach out to our team and ensure your business is properly insured today.
Need help choosing the right coverage for your home-based business? Start by speaking to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.
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