Do I need insurance for a home business?
The line between homeowners insurance and business property insurance can be blurry if you have a home based business.
Your homeowners policy may provide some coverage for your business property, but limits are typically low. You might not have enough coverage if the value of your business property is more than a few thousand dollars.
Home business insurance can help protect the things you need to run your company, typically with higher limits than homeowners insurance.
Business insurance can also offer additional protection homeowners insurance doesn’t have.
What does homeowners insurance cover?
Homeowners insurance is meant to protect your home and personal possessions.
If your house burns down in a fire or a tree comes crashing through your roof, the insurance company can help you cover costs to repair or replace your personal belongings and the physical structure of your home.
Many homeowners insurance policies only cover business property up to $2,500.
So if that same tree comes crashing through your roof and destroys the equipment you use in your business, the insurance can only reimburse you up to the policy’s limit for business property.
If you only need a laptop and some basic office supplies, that might be enough.
You might need business insurance if you have more than $2,500 in business equipment at your home
If you have expensive business equipment, office furniture or inventory stored in your home, you might need more coverage than what your homeowners insurance can provide.
For example, let’s say you have an online business and use extra room for your home office and inventory storage for the products you sell online.
If an electrical fire destroys your business computer, printer, desk and all of your inventory, your homeowners insurance might not reimburse you for everything you lost.
Commercial property insurance could provide more financial help if you purchase a policy with higher limits.
Business property insurance for home businesses
Commercial property insurance can help protect the things you need to do business. Plus, it can cover items not included in homeowners insurance policies.
Here are three types of coverage commercial property insurance offers that can help protect your home business:
- Goods, gear and inventory (also known as business personal property insurance): Helps cover the stuff you need to do business, including computers, furniture, equipment, custom upgrades, inventory and more.
- Business income coverage: Business income insurance can help cover loss of income if you need to temporarily stop your business operations because of a covered event such as a fire or burst water pipe. This is sometimes called business interruption coverage.
- Equipment breakdown coverage: Can provide financial help after mechanical failures, such as short circuits, power surges and loss of air pressure, that cause a piece of equipment to malfunction.
Other types of business from home insurance
To get the full advantages of home business insurance, you can consider expanding your small business insurance coverage beyond property insurance. Here are some examples of other types of business insurance that could help cover financial losses, depending on your business operations.
We typically recommend:
General Liability Insurance
General liability insurancefor home businesses can help to provide financial protection if someone other than an employee gets hurt or you damage property that doesn’t belong to you.
It also providesproduct liability insurance, which can offer important coverage to businesses that sell physical products.
Learn more about general liability.
Workers’ Compensation insurance
Workers’ compensation insurancecan help pay for medical care and lost wages after a workplace injury. It’s almost always required if you have employees. You can purchase optional business owners coverage if you would also like coverage for yourself.
Learn more about workers’ comp.
Commercial Auto insurance
Commercial auto insurancecan provide coverage if you are involved in an accident in a business-owned vehicle that involves an injury or property damage. It can also provide coverage for accidents in your personal vehicle while it’s being used for work-related purposes.
Learn more about commercial auto.
Professional Liability insurance (E&O insurance)
Professional liability insuranceis another type of liability coverage that can be particularly helpful for businesses that provide services or consultations. It can provide financial protection to defend your company if you are accused of making a business mistake or professional negligence.
Learn more about professional liability insurance.
Business Owner’s Policy (BOP)
A business owner’s policy bundles general liability coverage with commercial property insurance. Business owner’s can often find savings when purchasing both types of insurance together.
Learn more about business owner's policy.
