Starting a home-based business is an exciting step toward independence, flexibility, and financial growth. Before you get started, there’s one critical factor you might be overlooking—insurance. Many home-based entrepreneurs assume their homeowners or renters insurance will protect them, but that’s often not the case. Without the right coverage, you could be financially vulnerable if something goes wrong.
This article explores why your current homeowners or renters insurance may leave your home-based business exposed and what options you have to ensure full protection for your assets and operations.
Why Your Homeowners Insurance May Not Cover Your Business
Most standard homeowners and renters insurance policies are designed to protect personal property and liability—not business-related activities. This means:
- If a client or delivery person is injured on your property, your homeowners policy may not cover their medical expenses or legal claims.
- Business-related equipment such as laptops, inventory, or specialized tools may not be covered if damaged or stolen.
- If a fire, flood, or other disaster affects your home and business assets, your personal policy may exclude business-related losses.
That’s where business-specific coverage becomes essential.
What Type of Insurance Does a Home-Based Business Need?
Depending on the nature of your business, you may need one or more of the following types of coverage:
Home-Based Business Insurance Endorsement
Some insurance providers offer an endorsement (or add-on) to your homeowners policy, providing limited coverage for business equipment and liability. However, this is typically only suitable for small, low-risk businesses that don’t involve clients visiting your home.
General Liability Insurance
If customers, vendors, or employees visit your home, general liability insurance is essential. It protects you against:
- Injuries that occur on your property (e.g., a client slips and falls).
- Property damage caused by your business operations.
- Legal fees if someone sues you.
Business Owners Policy (BOP)
A BOP combines general liability and property insurance, making it a good option if you need broader protection. It typically covers:
- Business property losses (e.g., computers, furniture, inventory).
- Loss of income if your home-based business is forced to shut down due to a covered event (fire, theft, etc.).
Commercial Auto Insurance
If you use your personal vehicle for business deliveries, client meetings, or transporting goods, a standard auto policy won’t cover business-related accidents. A commercial auto policy ensures you’re protected on the road.
Professional Liability Insurance
If you provide consulting, coaching, or other professional services from home, professional liability insurance (also known as errors and omissions insurance) protects you against claims of negligence, mistakes, or inadequate work.
How to Determine the Right Coverage for Your Business
Consulting with an insurance agent is the best way to ensure you have the right coverage. They’ll help you identify risks and update your policies as your business grows. You can start identifying your risks by asking yourself the following questions:
- Do I have clients or employees visiting my home?
- Do I store inventory or use expensive business equipment?
- Do I provide professional advice or services?
- Do I drive for business purposes?
Protect Your Business and Future
Starting a home business gives you freedom, but it also comes with new risks. Relying on your homeowners insurance alone could leave you financially exposed.
With the right coverage, you can protect your business, assets, and future without breaking the bank. Talk to a local Farm Bureau Insurance agent today to make sure you’re covered!
Disclaimer: The information included here is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts.
