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Compare home business coverage

Cover your home-based business with a home insurance add-on or a separate policy.

If you own a small business that you run from home, you might want to consider buying home business insurance. Your standard home insurance policy has extremely limited coverage for your business property, typically no more than $2,500 in business contents, and you likely won't have any liability coverage for your home-based business.

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How does home business coverage work?

Home business coverage is a type of insurance that covers your business contents and liability exposures related to your business. You can add this as an endorsement to your existing home insurance policy, or you can buy a separate business owner’s policy (BOP).

BOPs are more expensive than adding a home business endorsement to your home insurance policy. However, it also comes with much broader coverage.

  • Business contents. Also called business personal property, this could include anything that you use for your home-based business. You can have protection for items like your laptop, printer, phones, childcare equipment or even desks and furniture you use for your business.
  • Business liability. This provides coverage if your business is sued for multiple business-related reasons. It could be as simple as a delivery person getting hurt on your property while delivering a package for your business or faulty work that you performed for a client.

What additional coverage can I get?

While shopping around with different companies to see which one is the cheapest, it’s also important to compare included or add-on coverage. Some home-based business add-ons could include extra coverage for:

  • Business income and extra expense. Provides a limit, usually starting at $5,000, that replaces lost income if you have a claim, such as a fire that destroys your business property. And, if your expenses increase as a result of the claim, you’ll be covered.
  • Accounts receivable records. Provides coverage to damaged paperwork related to accounting and accounts receivable.
  • Childcare services. Liability coverage for childcare services that care for three children or less.
  • Hired and non-owned auto. Provides liability coverage if you use a hired car or you borrow someone else’s vehicle for your business use.
  • Cosmetology liability.Provides liability coverage for salons, barbers and massage therapists for various health and beauty services.

Is my home business coverage eligible?

Not every home-based business is eligible for a home business endorsement on your homeowner’s insurance policy. Insurance companies use strict guidelines to decide which type of business is eligible.

Your insurance company will need to review your home-based business to approve this endorsement. It will look at your industry, sales volume and foot traffic volume in your house to determine eligibility.

Common home-based businesses that are eligible include:

  • Music teachers
  • Consultants
  • Photographers
  • Childcare for less than three children
  • Beauty shops
  • Cosmetic distributors
  • Secretaries

Do I need home business coverage?

Your standard home insurance policy doesn’t cover business activities, both in its property coverage and in its liability coverage, so there’s a chance a claim could be denied without the home business add-on. And if you opt for the pricier business owners policy, you won’t have as many coverage limitations.

Making false statements about the nature or size of your business could potentially negate both your business and home insurance coverage in a claim, so it’s important to be up front with your insurance company.

Is home business coverage worth it?

If your home-based business is eligible, then adding home business coverage to your homeowners policy is a lower cost option than buying a separate business owners insurance policy.

Adding the home business endorsement to your home insurance policy could cost anywhere from $25 to $100 per year, depending on the nature of your business and the type of coverage you need. However, your liability coverage may not be high enough to cover home and business liability claims since you’ll only have one liability limit.

If you buy a separate businessowners policy, or BOP, you can expect to pay anywhere from $250 to $500 a year.

What’s not covered by home business coverage?

Home business coverage should cover most of your home business risk through its property coverage and liability coverage, except for a couple of cases:

You use your car for business. Your home business policy won’t cover your vehicle for anything related to your home-based business. You can see if your auto policy covers you for your work or buy a commercial auto policy.

  • You use your car for business. Your home business policy won’t cover your vehicle for anything related to your home-based business. You can see if your auto policy covers you for your work or buy a commercial auto policy.
  • You have multiple business locations. If you have more than one location for your business, more than three employees or have a high sales volume, your home-based business coverage liability limits might not be high enough to cover you completely.

Which companies offer home-based business coverage?

You can find a policy to cover your home-based business with a variety of insurance companies, some of the main companies include:

  • The Hartford. Provides coverage that includes a combination of general liability insurance to protect you if you’re sued, and a business owner’s policy to protect your inventory and the structures on your property from damage.
  • State Farm. A small business insurance policy with State Farm can help cover your home-based business with a mix of specialized liability coverage, business property coverage and add-ons to customize your policy.
  • Axis. Offers coverage that includes general liability to protect you against any claims filed against you for injuries or damage caused on your property or from your products and services. Axis offers additional coverage you can add-on to protect your home-based business, such as professional liability or business contents coverage.
  • Hiscox. Provides general liability to protect you against claims of personal injury and professional liability to protect you against claims of negligence. You’ll also have the option to opt into a business owner’s policy that includes general liability and contents coverage.

Bottom line

Home business insurance protects your business contents and gives you liability protection for your home-based business. You might be able to add this coverage to your existing home insurance policy. However, there are often strict requirements and coverage limitations.

Otherwise, you’ll likely need to buy a separate business owner’s insurance policy, which costs more but also provides more comprehensive coverage. Compare different home insurance companies to find the best coverage options for home-based businesses.

Common questions about home business coverage

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