Insurance coverage for your home based business

home based business
As most new businesses are home based and most businesses are moving towards in home offices whether full or part time, it is important to address the insurance needs of a home based business to make sure you are properly covered. 50% of U.S. businesses are home-based businesses with information and construction industries are far more likely to be home-based businesses than other industries.

Most homeowners assume their Homeowners insurance policies cover their business property at home or even their business liability but that’s not always the case. 

Whether your business is covered and how much coverage you have depends on many factors so it’s important to have an in-depth conversation with your agent.

So let’s discuss the types of insurance coverage options you need to consider for your home business: 


Property coverage: Most homeowners policies have a limit on business property coverage. This is usually limited to basic office equipment such as your computer, printer, etc. However, if you have business inventory or special business equipment, the homeowner’s policy coverage limits will not be enough and a business policy is required to make sure you have the right coverage amount. Some homeowner’s policies might allow you to increase the business property coverage limit but this is subject to underwriting rules that look into the nature of your business and what kind of business property you would like to insure. 

Liability coverage: this is especially crucial to address if your at home business generates foot traffic at your residence frequently as the liability is much higher. Most homeowner’s insurance policies exclude business liability. Some would allow an extension of the liability to your business by endorsement but not all insurance companies offer this option. Also, this is subject to underwriting rules and the higher the risk, the less likely this option would be approved. So your next best option is a business policy. It doesn’t have to break the bank for premium, but can save the day in case of a claim. When in doubt, let’s share a conversation about some costs and coverage items.

Business auto coverage: personal auto policies often exclude coverage for business use on a personal auto policy unless the business use has been disclosed and approved prior to obtaining the coverage. Some companies have a business use surcharge on a personal policy and others offer an endorsement to extend coverage to business use like a rideshare endorsement. Make sure to discuss the business use with your agent to see if your personal policy could extend the coverage by endorsement or if you need to obtain a business auto policy. We have many options for companies, please don’t assume that the costs are unreasonably high.

Workers’ compensation coverage: this is particularly a crucial coverage to discuss with your agent especially if you have employees. Depending on your state laws, you might need to get a worker’s compensation coverage even if you have one employee. Failure to do so is in violation of state law and could jeopardize your business legally and financially in case the employee is injured while on the job.

Other coverage options: Depending on the level of risk of your at home business, your liability coverage would need to be increased or expanded to include professional liability. An umbrella policy could prove beneficial to your business. This allows to increase the liability coverage above and beyond what your business auto and business owner’s policy offer.

As your home business grows, you might want to consider professional liability as well. Professional liability covers a business against negligence claims due to harm that results from mistakes or failure to perform. Most of us realize that our family physician has medical malpractice coverage and our architect has professional liability insurance. Makes sense, right? If you are giving professional advice in your home business or performing some sort of professional service like massage, tax filing, auto repair, pc upgrades, etc. you may be exposing your assets to unnecessary risk.

Also, if your home business manufactures products for sale on the general market, product liability insurance is a must. Product liability helps protect your business if you were named in a lawsuit rising from damages caused by the use of your product.

Another coverage from business owners underestimate (especially home based businesses) is the loss of income if a disaster or catastrophic event does occur and your business is interrupted. Business interruption insurance compensates a business for the lost income during these difficult times. Most of us have known businesses that fought and fought to survive financially after a large claim (Did someone say “Almeda”?) but ultimately failed to be able to do so. Often those owners close down and walk away from all of their hard work and up-front time invested. This can be unnecessary if considered in advance.

Other optional coverage endorsement and policies could be needed depending on the nature of your home business. So make sure to have a thorough discussion with your agent. If you are unsure how and where to start the conversation, start by contacting us and one of our agents will be in touch with you.