Buying insurance for your home-based business in Central New York can feel overwhelming. You're not sure whether to add coverage to your existing home policy or purchase a separate commercial policy. You worry about overpaying for unnecessary coverage or, worse, discovering you're underinsured after a claim.
The challenge isn't just finding coverage—it's understanding which option actually fits your specific business situation. A barber working from home has different needs than a computer programmer or a dog groomer.
At the Horan insurance agency, we work with home-based business owners throughout Central New York to help them explore coverage options from multiple carriers. Our experience with various business types gives us perspective on which approaches may work for different situations.
In this article, we'll cover two main options for insuring your home-based business: adding riders to your home policy or purchasing a separate commercial policy. We'll explain the limitations of each approach, discuss additional coverage you might need based on your business type, and help you understand when each option makes sense.
Is Your Home-Based Business Adequately Insured?
Working from home is not a new phenomenon. Many people have been running their own businesses from their homes for a long time. If you’re one of them, you need to make sure your business has appropriate insurance. Otherwise, you could face serious financial and legal risks.
Home insurance policies are not designed to cover your business activities or property. So if a customer slips and falls on your driveway during one of our customary CNY winters, you may have to pay their medical bills and legal fees. That’s not good for you or your customer.
But how can you get suitable insurance coverage for your home-based business?
Option 1: Adding a Rider to Your Home Policy
One option is to add riders to your home insurance policy. Riders are extra coverages that you can buy through your agent.
However, this option has some limitations. First, you have to be a sole proprietor, meaning you own and run the business by yourself.
You can’t be an LLC or a corporation. You can use a business name, like “The CNY Bike Doctor,” but it can’t be a separate legal entity.
Second, your insurance company may only allow certain types of businesses to add riders to their home insurance policy. Here are some common examples of home-based businesses that may qualify:
- Accountant
- Dog Grooming
- Baker
- Bicycle Repair
- Child Daycare
- Computer Programming
- Dance studio
- Dentist
- Doctor
- Appliance Repair
- Engraving
- Lawyer
- Lawnmower Repair
- Music Studio
- Musical Instruction (Piano, Guitar, etc.)
- Musical Instrument Repair
- Photo Studio
- Taxidermy
- Tutoring
Not all insurance companies offer riders for all these businesses throughout Central New York. Some may only offer riders for a few of them. You have to check with your agent or insurer to see what they offer.
Another thing to keep in mind is that the amount of liability insurance you have for your business is the same as the amount you have on your home policy. Liability insurance pays for the damages you cause to others.
If you run a business from home, you may need more liability insurance than a typical homeowner. This is especially true if you have customers or clients coming to your home.
You also have to think about your business property. This includes things like tools, computers, instruments, and other equipment that you use for your business. Your standard home policy has limited or no coverage for these items. So you’ll want to add extra coverage for them.
Option 2: Getting a Separate Commercial Insurance Policy
Adding riders to your home insurance policy can be a convenient and affordable way to insure your home-based business. But it may not be enough for some businesses or situations. You may need a separate commercial insurance policy instead.
A commercial insurance policy gives you more flexibility and coverage options for your business. However, it also costs more and has a separate deductible.
You should compare both options and see which works best for your business needs and budget.
Other Commercial Policies to Consider for Your Home-Based Business
Depending on the field you’re in and how you conduct business, your home or standard commercial policy may not cover everything you need. You may require additional coverage.
Let’s say you have employees. You’ll need to get workers compensation and short-term disability coverage. These coverages pay for the medical and income expenses of your employees if they get injured or sick because of their work.
Another example is professional liability coverage. This coverage pays for the legal costs and damages if you make a mistake or cause harm to your clients with your professional services. Some professions that may need this coverage are
- barbers,
- accountants, and
- groomers.
You can’t get professional liability coverage from your home policy or an endorsement, but you can with some commercial insurance policies. You can also add one on its own.
Running a business from home can be rewarding and challenging. You want to help protect your business from any problems that may arise.
That's why you need suitable insurance coverage for your situation.
Finding Appropriate Coverage for Your Home-Based Business
We covered two main approaches to insuring your home-based business: adding riders to your existing home policy or purchasing a separate commercial policy. Each has distinct advantages and limitations depending on your business structure, type, and needs.
If you choose appropriate coverage now, you can focus on growing your business rather than worrying about gaps in your insurance. You'll have coverage that addresses your specific risks, whether that's customer injuries, damage to business equipment, or professional liability claims.
However, if you delay this decision or select inadequate coverage, you could face significant out-of-pocket expenses for claims your policy doesn't address. Many home-based business owners discover too late that their standard homeowners policy won't cover business-related losses.
The Horan insurance agency can help you explore coverage options for your home-based business. We work with multiple carriers, which allows us to discuss various approaches based on your specific business type and situation.
Click the Get a Quote button below to discuss your home-based business insurance options with one of our licensed agents.
And be sure to read our companion article: “Home-Based Businesses: Is Homeowners Insurance Enough?”
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