Jason Rodriguez, CIC, CPRM, Principal Advisor
Running a Business From Home? Your Homeowners Policy Probably Does Not Cover It
Most homeowners policies sharply limit business property and exclude business liability. Learn the gaps for home-based businesses and the endorsements and policies that close them.
A common gap for a common way to work
Roughly half of U.S. businesses are run from home, according to the Census Bureau's Survey of Business Owners. Consultants, contractors, bookkeepers, designers, online sellers, tutors and many more work from a spare room or garage. Most assume their homeowners policy has them covered. In most cases it does not.
Gap 1: business property has a low limit
Standard homeowners forms put a special limit on property used primarily for business. In the widely used ISO homeowners form, that limit is $2,500 for business property at your home and $1,500 away from it. The newer 2022 edition raises the at-home limit to $3,000. Carriers also use their own forms, so your number may differ.
Think about what that covers: a laptop, a printer, a desk and some inventory can easily exceed it. A fire or theft could leave most of your business equipment uninsured.
Gap 2: business liability is generally excluded
The liability section of a standard homeowners policy excludes injury or damage arising out of a business conducted from your home or engaged in by an insured. If a client trips on your front steps on the way to a meeting, or a product you sell injures someone, your homeowners liability coverage may not respond.
The policy's definition of "business" is broad. It includes any trade, profession or occupation, even part time or occasional. It also includes other activities for money, with a small exception for activities that earned less than a set amount in the prior year ($2,000 in the 2011 ISO form and $5,000 in the 2022 form). Professional services are excluded separately.
Gap 3: your car, your expertise and your data
Ways to close the gaps
The right fit depends on your business, how much property you have and whether clients come to your home:
Questions we will ask you
- What do you do, and do clients or customers come to your home?
- What equipment, inventory or tools do you keep, and where?
- About how much revenue does the business bring in?
- Do you have employees or helpers?
- Do you drive for the business or make deliveries?
- Do you give professional advice or handle client data?
How Prominent helps
We protect both sides of your life: your home and your business. As an independent agency, we compare home business endorsements, in-home business policies and BOPs across multiple carriers, and we coordinate them so nothing falls between your homeowners and business coverage.
Book a 30-minute review: https://calendly.com/prominentins/30min Call: 302-351-3368 (Pennsylvania: 267-921-0045)
Frequently asked questions
Does my homeowners insurance cover my home business?
Usually only in a very limited way. Standard forms cap business property, often at $2,500 to $3,000 at home and $1,500 away, and generally exclude liability arising from a business. Most home-based businesses need an endorsement or a separate business policy.
What if a client is injured at my home office?
A standard homeowners policy generally excludes injuries arising from a business conducted at your home. A home business endorsement, an incidental occupancy endorsement or a business policy can provide that liability coverage.
Is my side business too small to matter?
Possibly not. Any trade, profession or occupation counts as a business under standard homeowners forms, even if occasional. A small-income exception applies only to other activities for money. Ask your agent how your carrier's form treats your activity.
Does a home business endorsement include professional liability?
No. Home business endorsements such as HO 07 01 do not include professional liability. If clients rely on your advice or work product, you need a separate professional liability policy.
Does my personal auto policy cover driving for my business?
Standard personal auto forms generally allow business use of a private passenger car, but exclude driving for a ride service and often delivery work. Tell your agent how you use your vehicle.
This article is general education, not legal advice. Policy forms, limits and endorsements vary by carrier and edition, and your policy language controls. Talk with a licensed Prominent advisor about your business.