Does Homeowners Insurance Cover My Home-Based Business?


Does Homeowners Insurance Cover My Home-Based Business?

There are 30.2 million small businesses in the United States. In terms of raw quantity, small businesses make up 99.9% of all US business entities

Home-based businesses represent 59% of start-up businesses and 69% of established businesses (3 years or older). It's safe to say how your homeowners insurance interacts with your business is a very relevant question for business owners across America.

Usually, if there is any foot traffic to your home for your business, it will be excluded on your homeowners policy. If you do not have customers visiting your home, then you likely will be covered for the same set of perils as you would under your standard homeowners policy.

Common Home Businesses That Are Covered

  • Accounting/Bookkeeping
  • Freelance/Writing
  • Handmade Crafts Shipped Away
  • Virtual Assistant

Common Home Businesses Not Covered

  • Child Care/Day Care
  • Therapist/Life Coach
  • Private Tutor/Piano Teacher
  • Hair Salon

Even if your homeowners insurance policy does not cover your in-home business by default, you can sometimes purchase an endorsement on your policy (for daycare, the endorsement often has a child cap of 3-6 kids to be eligible). If no endorsement is available, then you will need a business owners policy as a separate policy.

How much does it cost to insure my business?

Getting your home-based business insured may not be as expensive as you may think. For general liability insurance, most small business owners pay between $400 - $800 annually.

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The type of coverage that you need will depend on the type of business that you operate.
 
How to insure your home business
 
Standard Homeowners Insurance Policy - If you don't have foot traffic to your home business, you may already be covered. Speak to your insurance expert to see what is already included in your policy.  

In-Home Business Endorsement - If you find that you are not covered by your home insurance policy, but your in-home business is a common service business, then an in-home business endorsement may be right for you. The endorsement will include liability coverage and reimbursements for lost income if your business is out of operation due to a covered loss.

Business Owners Policy (BOP) - If your home-based business is more established or has more regular foot traffic, then not even a policy endorsement to your home insurance will be sufficient. Consult a commercial insurance agent to get a full business owners policy.

When it comes to insurance coverage for your home-based business, there are plenty of options open to you for both general liability and property insurance. Examine your business, then get the assistance of an insurance expert to help you make the right choice. 

At your service,
Young Alfred