Do You Have Coverage for your Home Based Business?

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According to the 2012 Global Entrepreneurship Monitor report, more than two-thirds of businesses in the United States start at home, and 59% of established business owners continue to operate from home.*Any entrepreneur will tell you though, that with the perks of having a home business (no more morning commute!), come additional risks.

If you currently run a home business or have thought about starting a business out of your home, don’t make the mistake of assuming your homeowners insurance policy provides sufficient coverage.

There are separate business insurance policies available that can be critical in helping you protect your business against worst-case scenarios like liability claims, employee injuries, fraud, theft, vandalism and more. Some coverage options include:

  • Property insurance
  • Liability insurance
  • Workers' compensation insurance
  • Business auto insurance
  • Business crime insurance


Liability Coverage and Home Businesses

Let’s face it: small businesses are easy targets for lawsuits, and it only takes one lawsuit for a business owner to face financial ruin. 

While you can’t prevent a disgruntled employee or an angry client from taking legal action against you, you can protect the things you’ve worked so hard to build with business liability coverage.

For instance, imagine if the student you tutor in math trips over a toy and breaks his arm. You may find yourself facing a lawsuit.

Typically, a homeowners or a personal umbrella policy doesn’t provide coverage for incidents that take place while conducting business. Without separate business liability coverage, the medical expenses associated with his injury could be your responsibility to pay out of pocket.

(Keep in mind, as well, that in some cases you could add on an endorsement to your existing homeowners policy, for extra liability protection. Talk to your agent to see if your business qualifies.)

Property Coverage and Home Businesses

In addition to liability coverage, Business insurance can also provide coverage for your business property and office equipment.

If you’re like most home-based business owners, you may not have looked into purchasing a separate business insurance policy. After all, if your homeowners insurance covers your home, it should cover the business inside it, right?


Coverage for anything business-related (like your home office, samples, important paperwork, computer equipment, data etc.) is usually excluded from your homeowners insurance policy or only covered up to a low limit.

Let’s say someone broke into your home office and stole computer equipment worth thousands of dollars. How about if an accidental fire destroyed your inventory?

Business insurance can provide the financial buffer you need to get your business back on its feet by helping fund:

  • The cost of replacing your lost property
  • Replacing your lost income (in some cases).

That’s why it’s crucial for home business owners to have the right type of coverage in place. Some home businesses may require a separate commercial insurance policy to adequately cover the business exposure. However, other home businesses can be covered by adding a specified business pursuits on premises endorsement to your homeowner’s insurance policy. Examples of some businesses that may be eligible for this endorsement are: music teachers, tutors, consultants (beauty, bridal, graphic design, etc.), jewelry or handcrafts, photographers, accountants, and real estate agents.

Wondering if your home-based business is eligible for additional coverage through your homeowners policy? Interested in learning more about Farmers Business insurance? Talk to a Farmers agent, who will probably ask you the following questions:

  • Where is your business conducted, and what is the building’s primary use?
  • Is the business owned and run by you?
  • Are there any employees?
  • Does the business involve any home care services?
  • Are there any business signs displayed?
  • How many clients or customers visit the business?
  • Does the business use any hazardous or flammable materials?

For more information on whether or not your home-based business can be insured under your homeowners policy or through a business Insurance policy and additional coverage details, make sure to contact your local Farmers agent.


The information contained in this page is provided for general informational purposes only. The information is provided by Farmers and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.