Home Business Insurance Basics

Running a business from home doesn’t mean your homeowners insurance has your back. In fact, most home-based business losses are excluded. If your equipment gets stolen, if a product injures someone, or if a client slips on your walkway, a standard homeowners policy is going to deny it—and they’ll be right.

Before you assume you’re covered, review insurance exclusions. Home businesses hit nearly every category insurers refuse to touch.

1. Homeowners Insurance Covers Almost None of Your Business

This is the part homeowners misunderstand. Homeowners insurance is designed for personal use—not commercial activity.

• Business equipment coverage caps at $2,500 inside the home
• Only $500 is covered if equipment is stolen from your vehicle
• Product liability is excluded
• Business inventory is excluded
• Business interruption is excluded

If you rely on your equipment or inventory to make money, this is a massive blind spot.

2. Liability for Clients or Customers Is NOT Covered

If you have customers visiting your home—tax clients, tutoring students, hair clients, etc.—your homeowners policy won’t cover you if they’re injured.

• Slip-and-fall incidents → excluded
• Professional liability → excluded
• Negligence while performing work → excluded

Liability losses can bankrupt a small business fast. If you need a refresher on liability mechanics, see liability coverage basics.

3. You Need a Home-Based Business Endorsement (Minimum Coverage)

This is the starter package insurers offer for very small businesses. It bumps up key limits.

• Increases business property limit
• Adds basic liability protection
• Covers limited off-site work

Good for freelancers, online sellers, and low-risk service providers.

4. Business Owners Policy (BOP) for Serious Home Businesses

If your home business has real revenue, inventory, or customer traffic, skip the endorsement and get a BOP instead.

• Full business liability protection
• Higher equipment and inventory coverage
• Business interruption coverage
• Optional add-ons for cyber, errors & omissions, etc.

A BOP turns your operation into a properly insured business—not a gamble.

5. When Your Business Requires Its Own Policy

Some businesses are too risky for a homeowners attachment or BOP.

• Contractors
• Health or fitness professionals
• Manufacturing or fabrication
• Businesses handling sensitive data

These require standalone liability or professional insurance.

6. What You Should Do Right Now

• Make a list of all business-related equipment and inventory
• Estimate replacement cost
• Review your homeowners exclusions
• Decide whether an endorsement or a BOP fits your risk

Treat your home business like a real business—because your insurer definitely will when a claim hits.