What does Home Business Insurance Cover?

Lainie Petersen

Home business insurance provides homeowners and renters with both damage and liability coverage. The insurance can cover damage to a home, its furnishings, and household technology, as well as protecting the homeowner or renter from personal financial liability for injuries or accidents that occurred during the course of doing business. Home business insurance can also be purchased to cover accidents and incidents that take place in or with a home business owner's automobile.

Home business insurance will cover damage and liabilities in your home, but only if it occurred during the course of business.
Home business insurance will cover damage and liabilities in your home, but only if it occurred during the course of business.

Many people operate some type of home-based business. For example, many professionals such as lawyers, computer programmers, or therapists work out of their home. Craftspeople may also manage a home-based workshop, and some people engage in direct sales of products such as cosmetics, water filters, or food storage containers. While these entrepreneurs and business people may have both replacement and liability insurance on their homes, this coverage may be null and void if it is determined that the home functions as a place of business. In addition, even if a homeowner's or renter's policy covers damage to some items in the home, the damage or destruction to an item that is regularly used in business may be excluded from coverage. This means that if a family computer is damaged by fire or stolen, its owner may not be entitled to compensation if the insurance company finds out that the computer is also used in running a business.

Similar liability risks also exist. A lack of home business insurance can make an individual vulnerable if somebody has an accident in her home while conducting some form of business. The loss of coverage could occur even if the visitor visits the home for reasons other than business. If the incident takes place in a business context, the homeowner or renter may be liable for damage caused by a slip or dog bite.

Home business insurance coverage varies and in some cases can be added on as a rider to an existing insurance policy. Individuals who hold some form of malpractice insurance may also want to ask about its coverage in a home business context. If the home business owner has employees, even family members or their own children, he should mention this to his insurance agent to ensure that he gets the right kind of home business insurance. In addition, home business owners who maintain an inventory of supplies or products should make sure that their coverage will replace or reimburse them for damage to those items.

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Discussion Comments


Many home based business owners think it is not necessary to purchase additional insurance to their home insurance, assuming that this also covers any business activities in the home. In fact, certain home based business activities can impact negatively on your home insurance even making it invalid.

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