Are you running a business out of your home? According to surveys, nearly one in four Americans operates some form of home-based business, from part-time pursuits such as tax preparation and small appliance repair to full-time enterprises like construction companies and real estate offices.
No matter what your business or the time spent on it, if you operate out of a home office or have your headquarters in your home, consider special insurance coverage. Your homeowners insurance, although one of the most comprehensive personal policies, was not designed to include broad coverage for business activities. For a clear overview of why standard policies may fall short, see The Importance of Home-Based Business Insurance.
For example, a homeowners policy might include limited coverage for some business property (computer, filing cabinet, desk, chair), but this amount is usually small. Coverage is often even more restricted for property taken away from the home, such as a laptop, and inventory held for sale is commonly excluded entirely.
Because these limits and exclusions vary by company and policy language, check your policy definitions and schedule to understand what is and isn’t covered. If you need broader protection, there are options to expand property coverage or increase limits.
Standard homeowners policies, with few exceptions, exclude liability claims arising from your business activities. That exposure represents a significant risk of loss; an expensive lawsuit or settlement could threaten everything you’ve built. For help understanding the liability exposures and policy options, review Safeguarding Your Home Business: Essential Insurance Coverage and Risks.
Also consider specialty coverages that homeowners policies typically do not include, such as professional liability (errors and omissions), advertising or publication liability, coverage for customer property left in your care for repair or refinishing, and workers compensation if you have employees.
Talk with your insurer or agent to identify gaps and appropriate endorsements or separate business policies that match your operations. For more information on protecting your home business, talk to an agent.
Frequently Asked Questions
Does homeowners insurance cover business equipment?
Homeowners policies sometimes provide a small amount of coverage for business equipment stored at home, but limits are typically low and off-premises property is often excluded.
Will my homeowners policy cover a customer injured at my home office?
Most homeowners policies exclude liability arising from business activities, so injuries to customers may not be covered without a business liability endorsement or separate policy.
Do I need workers' compensation for part-time help?
Workers' compensation requirements vary by state and the number of employees; even part-time help may require coverage, so check local rules and your insurer’s guidance.
Is inventory stored at home protected by homeowners insurance?
Inventory held for sale is commonly excluded from homeowners coverage and usually requires a commercial policy or endorsement to be protected.