Starting a Business? Your Homeowners Policy Does Not Cover It.
Most home-based business owners do not realize their homeowners policy excludes business property and business liability. Here is what you actually need — and what it costs.
The Home-Based Business Exclusion
Standard homeowners policies contain a business exclusion. If a client trips and falls in your home office, your homeowners liability does not cover it. If your business laptop is stolen, your homeowners personal property coverage may not cover it. If you store business inventory at home, it is likely excluded entirely. This is not a gray area — it is a standard policy exclusion that catches thousands of small business owners every year.
What Coverage Do You Actually Need?
General Liability Insurance
RecommendedCovers bodily injury and property damage claims from third parties. If a client is injured at your business location or you damage a client's property, general liability pays. Most clients and contracts require it. Starts around $400-$800/year for a small business.
Business Owner Policy (BOP)
RecommendedBundles general liability and commercial property coverage into one policy. The most cost-effective option for most small businesses. Covers your business equipment, inventory, and liability in one package. Typically $500-$1,500/year depending on your business type.
Commercial Auto
If you use your personal vehicle for business — deliveries, client visits, transporting equipment — your personal auto policy may not cover a business-related accident. A commercial auto endorsement or separate commercial auto policy closes this gap.
Workers Compensation
Required in most states if you have employees. Covers medical expenses and lost wages for employees injured on the job. Even one part-time employee typically triggers the requirement.
Professional Liability (E&O)
If you provide professional services or advice, errors and omissions insurance covers claims that your work caused a financial loss. Required for consultants, designers, accountants, real estate agents, and many other service businesses.
If You Work From Home
You have two options: add a home-based business endorsement to your homeowners policy (covers business property up to $2,500-$5,000 and adds limited business liability) or buy a separate BOP. The endorsement is cheaper but limited. A BOP provides broader coverage and is usually the better choice if you have clients visiting your home, significant business equipment, or business inventory.
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Starting a Business in CO, MN, or AZ?
We specialize in small business insurance and can find the right coverage for your specific business type. Call (719) 591-2036 or get a quote online.