Does My Home Insurance Cover My Home-Based Business?

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A new home-based business starts up every 12 seconds in the U.S., according to What many home business owners might not realize is that their standard home insurance policy usually only provides minimal coverage for their home-based business.
In many cases, a home insurance policy only provides a maximum of $2,500 of coverage for business property within your home. This often leaves many in-home business owners wondering what options they have when it comes to insurance for their home business. Here’s what you need to know about how much a standard home insurance policy covers a home business.

Does my home insurance cover my home-based business?

While a home insurance policy does provide a minimal amount of coverage for a business in your home, this coverage only protects certain things associated with your business, including any equipment and other property associated with your home business.
Your home insurance provides no liability insurance for anyone injured in connection with your business on your property, lost income from your home getting damaged, or lost intellectual property due to a hack of your computer files or other theft.
So, for instance, if a delivery person gets hurt on your property delivering an item for your business, your home owners policy does not cover their medical bills. It also doesn’t pay you for any income lost if your home catches on fire and you cannot do any business while it is repaired. Likewise, you are without recourse when it comes to your home insurance policy if you lose data following a hack of your home computer network.

What is home business insurance?

Insurers extend coverage to you and any family members who live in your home. In order to mitigate the risk involved in insuring your home, insurance companies do provide liability protection for any employees or anyone else associated with your business injured in your home. This is to protect the insurer from having to take on unnecessary risk in situations where a business insurance policy would be more appropriate.
Even though your home insurance policy does not provide much coverage when it comes to your home business, you do have a few options when it comes to insurance, including the following coverage.
  • ** Homeowners policy endorsement:** A homeowners policy endorsement increases the amount of coverage for any business-related equipment you keep in your home. In addition, many insurers offer a liability endorsement as well to provide coverage for any injuries associated with your business suffered at your home.
The cost for an endorsement usually runs about $10 a month for an additional $2,500 worth of coverage on your business equipment, but it does not include liability coverage, according to
  • In-home business policy: A step up from an endorsement, an in-home business policy provides even more protection for business-related equipment and liability coverage. For around $20 to $30 per month, you get an additional $10,000 of business equipment protection and up to $1 million in liability protection, according to
  • Business owners policy: A Business Owners Policy, also known as BOP, gives your home business the most comprehensive coverage, providing many of the same protections of an in-home business policy but at an increased amount. The cost for a BOP varies according to the specific risks of the business that you run from your home and the size of your business.

Do you need a commercial insurance policy?

In addition to an endorsement, in-home business policies, and BOPs, you can also opt for a commercial insurance policy. Many home businesses are too small for this type of coverage, though, because a commercial insurance policy only comes into play for larger businesses that have grown large enough to encompass your whole home, requiring you to move to new accommodations.
Providing an adequate amount of insurance for your home business can help protect you from loss. Otherwise, if someone gets injured on your property performing a task associated with your business, you might be left paying for their medical bills. Also, with a standard home insurance policy, you have no way to recoup lost wages suffered when your business is put out of commission due to a fire or other damage. So check out your insurance options to ensure your home business is protected.

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