Home-based business insurance: what your homeowners policy won't cover
If you run a business from home, your homeowners or renters policy probably doesn't cover it well. Standard policies commonly limit business property to about $2,500 at home and as little as $250 to $500 away from home, and they generally exclude liability for business activities, like a client tripping on your steps. You can close the gap with a home business endorsement, an in-home business policy or a business owner's policy.
Published by Marcus L. Barber, former licensed Maryland property and casualty producer (2010–2012)Reviewed by Marcus L. Barber on Updated This guide is general education, not advice for your situation. We're an independent publisher, not an insurer or agent, and we may earn a commission from partner links. How we make money.
Key points
- Business property limits on a homeowners policy are low: commonly $2,500 at home and $250 to $500 away.
- Homeowners policies generally exclude business liability, so a customer hurt at your home may not be covered.
- Lost income, client data and business records are usually not covered either.
- Options, from smallest to broadest: an endorsement, an in-home business policy, or a BOP.
The gaps in your homeowners policy
| Risk | Standard homeowners or renters policy |
|---|---|
| Business equipment and inventory at home | Commonly capped around $2,500 |
| Business property away from home | Commonly $250 to $500 |
| A customer injured at your home | Generally excluded |
| Lost income after a fire or storm | Not covered |
| Lost records, receivables or client data | Not covered |
| A garage or shed used for the business | Often excluded |
New York's standard homeowners terms, for example, limit business property to $2,500 on premises and $500 away, so a business laptop stolen from your car is covered for only $500. Maine's insurance bureau says a homeowners policy generally excludes liability for most business activities, and Wisconsin's regulator adds that it usually won't cover a customer injured on your property or the income you lose while you rebuild.
For the general rules on how much your homeowners policy covers, see the parts of a homeowners policy.
Three ways to cover a home business
The Insurance Information Institute and Maine's insurance bureau describe the same three options:
| Option | What it adds | Best for |
|---|---|---|
| Home business endorsement (rider) | Raises business property limits; may add limited liability | Very small businesses with little equipment and few or no visitors |
| In-home business policy | Business property, business liability, lost income, some coverage for valuable papers and receivables | Established home businesses with some client contact |
| Business owner's policy (BOP) | Bundled property, liability and business income coverage | Businesses with employees, frequent visitors or more equipment |
Endorsements are usually the cheapest option but suit only very small operations. Maine's insurance bureau recommends a BOP if employees, contractors or customers visit often. See our BOP guide.
Which option fits
- List your business property and its replacement cost: computers, tools, inventory, samples.
- Count your visitors. If clients, customers or employees come to your home, you need business liability.
- Ask what your income depends on. If a fire would stop your business for months, look for business income coverage.
- Check your contracts. If clients require proof of general liability, an endorsement may not satisfy them; see general liability insurance.
- Get quotes for at least two options, starting with your homeowners insurer.
Other coverage to consider
- Professional liability if you give advice or professional services; see professional liability (E&O).
- Commercial auto if you use your car for deliveries or other business driving; see commercial auto insurance.
- Workers' comp if you hire employees; see workers' comp.
Water damage is a common way home business equipment and records get destroyed. If it happens, our sister site Home Water Damage Help explains what to do when a pipe bursts.
Tell your insurer
Let your homeowners or renters insurer know you run a business from home, even if you buy coverage elsewhere. Undisclosed business activity can complicate a claim, and your insurer may offer an endorsement that costs less than you'd expect.
Common questions
Does homeowners insurance cover a home-based business?
Only a little. Standard policies commonly cover about $2,500 of business property at home and much less away from home, and they generally exclude liability for business activities. Most home-based businesses need added coverage.
Does homeowners insurance cover my business laptop?
Often only up to the business property limit. New York's regulator gives the example that a business laptop stolen away from home is only covered for $500 under its standard homeowners terms.
What is a home business endorsement?
An add-on to your homeowners policy that raises the business property limit and may add some liability coverage. It's the cheapest option and suits very small businesses with few visitors.
Do I need a separate policy if clients come to my house?
Probably. A homeowners policy generally excludes liability for business activities, so if customers, clients or employees visit, you need business liability coverage through an in-home business policy or a BOP.
How this guide was made
We drafted this guide with help from AI writing tools, working from the sources listed below. Every fact was checked against those sources, and Marcus L. Barber read and reviewed the full page, including its title, description and FAQs, before it was published. AI tools don't decide what we publish; a person does. Our editorial standards.
Sources
- Homeowners insurance: Basic coverage, New York State Department of Financial Services
- Insuring your home business, Maine Bureau of Insurance
- Consumer's guide to insurance for small business owners (PI-085), Wisconsin Office of the Commissioner of Insurance
- Home-based business insurance, Pennsylvania Insurance Department
- Insuring your home-based business, Insurance Information Institute
- Get business insurance, U.S. Small Business Administration