Home insurance protects your house and business insurance protects your business … but which one protects a home business? It can be overwhelming when you consider everything that needs security: your income, liability, business equipment, documents, and more — all things a regular home insurance policy might not cover.
Worry not, though. We’ve highlighted some features of both homeowners insurance and business insurance for you to consider. Of course, every situation and policy is a little different, so if you’re unsure whether you need business insurance, check with your insurer.
What might constitute a home business?
Some home businesses are hard to categorize. For instance, if you’re a seller on Etsy who keeps merchandise at home, homeowners insurance might not be enough to protect your work-related assets. But, if you provide an immaterial good (like a proofreading service for writers) and use a PayPal account to receive payment, you might not need any more coverage than your home policy provides.
A business like a home day care can be even harder to classify. If you nanny 2 kids in your house every day, you may be fine with just separate liability insurance or an umbrella policy. But depending on the number of kids you provide care for and your local and state laws, you may or may not qualify as a business in need of more protection than your home policy provides.
Because every business is unique, it’s always good to talk with your insurer first to see what your options are and how to get the best coverage for your situation.
What a standard homeowners policy covers
Homeowners insurance typically covers your house, the personal belongings you keep there (like furniture, clothing, and electronics), and your personal liability. Say a hailstorm ravages your roof, your TV is stolen or damaged, or you accidentally injure a neighbor or their property — homeowners insurance would help cover the costs of repairs and your legal fees.
Why your homeowners policy might not be enough
There are a few reasons your business might require more coverage than a standard home insurance policy provides.
You have business equipment and supplies
Even a laptop (if specifically used for work) could constitute business property. Meanwhile, a homeowners policy limits coverage to personal belongings and may not cover business equipment, merchandise, or supplies.
You keep business documents at home
Valuable intellectual property that pertains to a business (like client lists or tax records) isn’t generally covered under homeowners insurance.
Employees work out of your home and/or clients visit your home
If there’s a chance that someone visiting your home for work purposes (be it an employee, client, or delivery person) could be injured, a homeowners policy won’t likely cover claims for professional liability or injury costs.
Coverage options for home business owners
If you do have a home business, here are some options that might be available to you.
Rider to a home policy
If you run a solo operation (meaning you have no employees), you might be able to purchase a rider (an add-on) to your regular home policy. If you don’t have much equipment specifically for your business, this option may be available to you.
Separate liability insurance can also be a good option — even for a small-scale home business — just in case a delivery person gets injured carting your work-related ink cartridges up your walkway.
In-home business policy
If your home business is small, an in-home policy might suit your needs because it covers injury- and theft-related damages for up to 3 employees.
In addition to an in-home business policy, you might also consider purchasing errors and omissions (E&O) insurance if your business provides services to clients for a fee and could potentially be sued for negligence.
E&O insurance protects you from claims of professional misrepresentation or mistake, like if you have a flower delivery company and you accidentally provide a client funeral flowers rather than a wedding bouquet — yikes.
Business owners policy (BOP)
A BOP typically bundles property and liability protection (and a few other types of business protection, like crime and commercial car coverage) for a large-scale home business. It usually costs less than if you were to buy the 2 coverages separately.
Plus, this kind of policy typically covers a much higher amount of loss than a rider to a home policy or an in-home business policy, which could come in handy for home businesses with more employees, assets, and revenue to protect.
Get a business insurance quote through Esurance
If you research your options and decide a business insurance policy is right for you, get a quote through Esurance from one of our trusted partners. You’ll see a wide range of occupation-specific coverage options designed to help protect your home business.