You've invested time, energy, and money into building your home-based business throughout Central New York. But when you need to file a claim for damaged inventory or face a liability lawsuit, discovering your homeowners policy won't cover business losses can derail everything you've worked to create.
Many home-based business owners assume their homeowners insurance extends to their business activities. This assumption puts both your business and personal assets at risk.
Homeowners insurance includes specific limitations and exclusions for business-related property, liability claims, and income loss—including low coverage limits, no coverage for structures used for business purposes or data loss, and no coverage for business liability claims or lost income.
At the Horan insurance agency, we work with home-based businesses like yours to assess coverage requirements. Whether you sell products online, offer professional services, or cater to local customers, we can help you explore insurance options from multiple carriers.
Depending on your line of work, you might ask, "Is insurance really necessary?" or "How could my business really cause harm to anyone?"
These are common questions many home-based business owners have, but you may not realize the potential risks and liabilities you face every day. No matter what kind of business you operate, there's always a possibility that something could go wrong and cause harm to someone or something.
By researching this matter, you're taking a proactive and responsible step. Obtaining insurance for your home-based business is a smart investment that can help safeguard your business and personal assets from unforeseen events.
In this article, you'll learn why home-based business insurance is important for entrepreneurs who run businesses from home, what types of coverages are available, and how they can provide financial support for losses and lawsuits.
After reading to the end, you'll have a better handle on identifying affordable and flexible home-based business insurance options that may suit your situation.
Limitations of a Home Policy for Your Home-Based Business
Did you know that 51.6% of all US small businesses are home-based businesses? That means numerous entrepreneurs like you are facing unique risks every day. Home-based business insurance is a viable way to help safeguard your enterprise.
If you think your homeowners insurance will cover you, it may not in certain cases. Homeowners insurance has several limitations and exclusions for business-related property, liability, and income loss, such as:
- Homeowners insurance doesn’t cover personal liability claims related to your business activities or products. This means you have limited or no protection if you’re sued by a client, customer, or vendor for causing property damage, bodily injury, or advertising injury.
- Homeowners insurance doesn’t cover other structures used for business purposes, such as a detached garage or shed that stores boxes of saleable goods. This means you have limited or no protection for those structures or their contents if they’re destroyed by a fire, storm, or other peril.
- Homeowners insurance only covers up to $2,500 of business property within your home and $500 of business property away from your home. This is often insufficient to cover your business equipment, inventory, or records if they’re damaged or stolen.
- Homeowners insurance doesn’t cover data loss, which can be a significant risk for businesses that store sensitive or valuable information on their computers or online platforms. This means you have limited or no protection if your data is corrupted, deleted, or hacked.
- Homeowners insurance doesn’t cover loss of income if your home is damaged and you can’t run your business. This means you have limited or no protection if you lose revenue or incur extra expenses due to disruptions.
To illustrate these limitations, say you’re a home-based candle maker in North Syracuse who stores your full-year inventory of candles, wax, and fragrance oils in your basement.
You rely on a home policy for your business, but one night, a faulty electrical outlet sparks a fire that quickly spreads throughout your basement, destroying your inventory and damaging your home.
You have no insurance to cover your business property or income loss, and you have to pay for the fire damage and the lost inventory out of pocket. You lose thousands of dollars and months of work, and you have to start your business from scratch.
Or maybe you're a home-based graphic designer in Ithaca who creates logos and websites for local businesses, but you rely on homeowners insurance to cover your business activities.
One week, you design a logo for a body shop client in Utica who’s unhappy with the result and refuses to pay you.
The client then sues you for breach of contract and claims your logo infringes on a competitor’s trademark. You have no insurance to cover your professional liability or legal fees, and you have to defend yourself in court out of pocket.
You end up paying a hefty settlement and losing your client’s trust and referrals. You lose income and reputation, and you have to rebuild your portfolio, which takes years.
These are real-world scenarios that happen quite often. If faced with a similar situation, how would you cope with the financial burden and emotional consequences?
As demonstrated above, homeowners insurance may not provide adequate coverage for your home-based business. That’s why it’s important to review your homeowners policy and contact your insurance agent to discuss your business needs.
Depending on the type of business you have, your insurer may be able to offer you an endorsement or a separate policy (like those discussed below) that can fill the gaps in your coverage and provide financial support for your business against unexpected losses.
Don’t wait until it’s too late to find out that your home-based business is not covered by your homeowners insurance.
Benefits of Commercial Insurance for Your Home-Based Business
On the other hand, there is home-based business (or commercial) insurance. This commercial insurance can cover the risks and liabilities of running a business from your home. Home-based business insurance can include different coverages depending on your business needs, such as:
- General liability insurance, which can help pay for property damage, bodily injury, or advertising injury claims related to your business activities or products.
- Professional liability insurance, which can help pay for legal fees and damages if you’re sued for making a mistake or negligence in your professional services.
- Workers compensation insurance, which can help pay for medical bills and lost wages if you or your employees are injured or become ill while working for your business.
- Commercial property insurance, which can help pay for the repair or replacement of your business property, such as inventory, equipment, or files, if they’re damaged or stolen by a covered peril.
- Business income protection, which can help pay for your lost income and extra expenses if your home is damaged and you can’t run your business. This coverage can provide financial support if your business operations are interrupted by a covered peril.
If you run a home-based child daycare in Herkimer, let’s say, and take care of several children in your living room, you’ll need more than a home policy to run your business.
For instance, if one of the children trips over a toy and falls, breaking their arm, and the child's parents sue you for medical bills and pain and suffering, with general liability insurance in place, you're likely to be covered for the bodily injury claim and any legal fees.
Or if you're a home-based dog groomer in Camden, New York, and offer grooming services for pets in your garage, and one of the dogs bites you while you're trimming its nails, causing a severe infection, you may have to go to the hospital and miss work for several days.
Your workers comp insurance may cover your medical bills and lost income for those days. Learn why workers comp insurance is essential even if you're the only employee at your home-based business.
Professional liability insurance can cover you if you’re a home-based doctor in Oswego, New York, and offer telemedicine consultations for patients online.
Say you prescribe a medication for a patient based on their symptoms, but the patient has an allergic reaction to the medication and suffers a severe rash. The patient sues you for malpractice and emotional distress. Your professional liability insurance may pay for the legal fees and damages.
Overall, commercial insurance for your home-based business can provide numerous benefits. It may help you pay for claims and lawsuits related to property damage, bodily injury, advertising injury, professional liability, workers compensation, and business income loss.
Having suitable coverage for your small home-based operation can safeguard your business and your personal assets against a host of possible mishaps and perils.
Choose the Coverage Type and Amount Suited to Your Home-Based Business
Choosing coverage suited to your specific line of work is crucial for helping to safeguard your business from potential losses and lawsuits. Different types of businesses face different types of risks and liabilities, and you need to make sure your home-based business insurance policy covers all the scenarios that could affect you.
You also need to make sure that your coverage limits are high enough to cover the full extent of any damages or injuries that could occur as a result of your business activities or products. Underinsuring your business could leave you exposed to paying out of pocket for any costs that exceed your policy limits.
Overinsuring your business could result in paying more than you need for coverage you don’t use. That’s why it’s important to assess your business needs and compare different home-based business insurance options to find the best fit for your business.
Secure Required Coverage for Your Business Operations
By following the advice in this article, you've learned about the limitations of homeowners insurance for business activities and the types of commercial coverage available. We've covered how standard home policies restrict business property coverage to $2,500 inside your home and $500 outside it—amounts that rarely cover actual business assets.
We've also explored how general liability, professional liability, workers compensation, commercial property, and business income protection each address specific risks your home-based business may face.
The question now becomes: will you take action to address these coverage gaps, or will you continue relying on a homeowners policy that may leave you financially exposed?
Without suitable commercial insurance, your home-based business could face significant financial setbacks and legal challenges. A single lawsuit or property loss could consume years of profits and jeopardize your personal assets. The time to address these vulnerabilities is before a claim occurs—not after.
We work with home-based businesses throughout Central New York to assess coverage needs and explore options from multiple carriers. Our approach involves learning about your business operations, identifying the assets your business depends on, and helping you determine suitable coverage amounts based on your potential liability exposures.
As an independent agency, we can present options from several carriers, which allows us to provide perspectives on coverage that may be unavailable through agencies working with single insurers. We're committed to serving as a resource for understanding your insurance options as your business grows.
To begin exploring coverage options, click the Get a Quote button below. One of our insurance professionals will reach out to discuss your situation.
You're making a wise decision by researching commercial insurance options for your home-based business. A suitable policy can provide financial support for your business and personal assets, and may also help you build credibility with customers by demonstrating your commitment to professional standards.
To learn more about insurance for home-based businesses like yours and the coverage options available to you, read “The Best Insurance Options for Home-Based Businesses.”
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