Homeowner’s insurance

Homeowner’s insurance protects your house and personal belongings from risks like fire, theft, vandalism, storms, and certain types of water damage. It also provides personal liability coverage if someone is injured on your property due to non-business activities.

While homeowner’s insurance is essential for protecting where you live, it’s not designed to cover business property or business-related risks, which is a major concern for home-based small business owners.

Most homeowner’s insurance policies provide protections meant for personal life, including:

• Dwelling coverage: Protects the structure of your home.
• Personal property coverage: Pays to repair or replace personal belongings.
• Personal liability protection: Covers legal expenses if someone sues you for a personal injury or property damage unrelated to business activities.
• Additional living expenses: Helps pay for temporary housing if your home is uninhabitable after a covered loss.

Not typically. In most cases, homeowner’s insurance excludes or severely limits coverage for business equipment, tools, inventory, and any liability that arises from business activities.

In the case of limited coverage, many homeowner’s policies will offer:

• $2,500 for business equipment stored on your property
• $500 for business items off-premises, such as in your car or at a client’s location

These limits are rarely enough to replace laptops, cameras, tools, cleaning equipment, or inventory used by small business owners.

Homeowners policies are written for personal risks, not commercial ones, so if your insurer determines a claim involves your business, they can:

• Deny the claim
• Cancel your policy
• Refuse future coverage

That’s why it’s important to understand the boundaries between personal and business use.

If you do any of the following, your business activities may exceed what a homeowner’s policy allows:

• Clients or customers visiting your home: If a client slips on your stairs during a home appointment, it’s not covered under homeowner liability.
• Using your home to sell, store, or ship products: Homeowner’s insurance won’t cover stolen business inventory or legal issues related to product sales.
• Employees working from your home: Even a part-time assistant or helper counts as a business exposure.
• Relying on specialized tools or equipment: A stolen camera, contractor’s saw, or computer used for business is likely not covered.
• Handling client data or working online: Homeowner’s insurance doesn't cover business-related cyber incidents, data breaches, ransomware, or phishing losses.

Some insurers allow limited business protection through endorsements such as:

• Business property endorsement: Expands the low limits on business equipment stored at home.
• Business pursuits endorsement: Provides limited liability coverage for certain business activities, but exclusions still apply.
• In-home business endorsement: Covers low-risk home businesses (like tutoring or bookkeeping), but not those with customer foot traffic or expensive equipment.

These endorsements, while better than not having coverage, still don’t replace full commercial coverage.

If you run any type of business from home—consulting, photography, landscaping, or freelance work—you may need one or more commercial policies:

• Business owner’s policy (BOP): Combines general liability and commercial property coverage to cover business equipment and inventory, customer injuries, and business interruption after a covered property loss.
• General liability insurance: Protects against customer injuries, property damage, and advertising injuries.
• Professional liability / errors and omissions (E&O) insurance: Covers mistakes or service errors that cause financial loss for a client.
• Cyber insurance: Covers data breaches, hacked devices, ransomware attacks, client data exposure, and business email compromise, none of which are covered by homeowner’s insurance.
• Commercial auto insurance: Required if you drive your personal vehicle for work in ways your insurer considers “commercial use.”

Home-based small business owners often assume their homeowner’s insurance covers their operations, but coverage gaps can be large enough to jeopardize the business.

Dedicated small business policies give you:

• Higher limits
• Broader protection
• Coverage tailored to your industry
• Compliance with client contracts
• Peace of mind your business won’t be derailed by a claim

Insureon helps small businesses compare quotes from top-rated carriers so you can find the right coverage, fast.