Does Your Home Insurance Cover Your Small Business?


Do you remember Henn? Their beautiful handcrafted baskets and sponged pottery were popular and the perfect complement to a country kitchen. That was around 2005 and I fell in love with the quality of the products. My kids were little, I was a stay-home mom, and I also really needed some adult socialization. It was the perfect fit! I signed up to be an official Henn Home Consultant.




I took care of my kids during the day and in the evenings, I worked from home or hosted parties for ladies that had the same affinity for Henn. I didn't give insurance a second thought. It wasn't a full-blown business and it was so part-time. I already had homeowners insurance.

I was so wrong! I know now I may also have been unknowingly jeopardizing my home insurance policy. 

Here's why:

My homeowners insurance was for my home, not my business. And if I had a claim, I may have invalidated my policy because my insurer was not aware of my business. There are many things to consider that will help you decide if you need separate insurance for your small business. Here are a couple big ones.



Business Property

When I ran my business and had equipment I used. I had a computer, printer, and cell phone. I also sometimes had inventory. Do you have power tools or a photography studio? Homeowners insurance policies have content limits (that's the most coverage you could have for the stuff inside your home). When you chose your homeowners coverage, you set those limits. If you had a claim, the damage to the extra contents from your business could exceed those limits and they might not be covered anyway.



There are also other questions that need to be answered. For example: how much of the time do you use the equipment for business? Does the property go with you when you leave to do your work elsewhere? Do you have a workshop or separate building where you operate your business? 




Liability is the state of being responsible for something, especially by law. The liability portion of your home insurance might cover your friend's child that hit her head while playing in your backyard. But it's not going to cover a dog bite for that child while you're running a pet sitting service from your home. See the difference?

Professional liability insurance will protect you and your clients from any damages or suffering resulting from your business activity. It also protects your personal assets and pays for legal defense if needed. There are many kinds of liability insurance for businesses and it's important to do the work to determine the best one for yours.



The same holds true for your car. If you're using your car for business purposes, you may need a separate policy. We're not talking about commuting to work unless your providing carpooling services, but using your personal car for ridesharing like Uber, Lyft or food delivery, is another story. Did you know your car insurance is completely void as soon as you log into a ridesharing app? There are very specific ins and outs around these types of services for insurance coverage that warrants professional advice. 

Other scenarios where your personal car insurance would be voided for business activity include using your personal vehicle to deliver the mail and driving a church van to take church members to different places. Both of those require a commercial policy.



The bottom line is you really need to talk with a licensed insurance professional if you have any small business activity. They will help you determine if you need separate contents and property insurance, professional liability or any other coverage for your business.  It truly depends on what kind of small business you have. From sales and blogging, consulting and childcare, to pet care and handyman services, there are a ton of variables. And even the smallest details can have a big effect on your homeowner's policy. Make sure you have the best protection for your small business without compromising coverage for the things you value most.