Does Your Home Insurance Cover Your Small Business?

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Do you remember home party businesses? Around 2005, I was invited to a basket party and fell in love with the handcrafted products. My kids were little, I was a stay-home mom, and I needed some adult socialization. I signed up to be an official party consultant and could do parties in the evenings. It was the perfect fit! I didn't even think about business insurance. It was so part-time and right from home. Anyhow, I had homeowners insurance.

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

Why home insurance doesn't cover small business

Homeowners insurance is for your home. And if you have a claim that happens during the business activity, you may invalidate your policy if your insurance carrier is not aware of your business. There are many things to consider to help you decide if you need separate insurance for your small business, especially business property and liability. 

 

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Business property and home insurance

When I ran my business, I had a computer, printer, and cell phone. I also sometimes had inventory. Other small businesses can have expensive property like power tools, photography equipment, and technology.  Your homeowners insurance policy has content limits- that's the most coverage you could have for the stuff inside your home. When you choose your homeowners coverage, you set those limits. If you had a claim, the damage to the extra contents from your business could easily exceed those limits. They also might not be covered if you purchased them or use them for your business. 

 

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Other questions about your business property that can affect your home insurance:

  • 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 and home insurance

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?
 
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What is business liability insurance?

Professional liability insurance will protect you and your clients from any damages or suffering 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, so it's essential to do the work to determine the best one for you.

 

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Can I use my personal car insurance for business?

If you're using your car for business purposes, you most likely need a separate policy. We're not talking about commuting to work unless your providing professional carpooling services, but using your personal car insurance for ridesharing like Uber or Lyft is another story. Did you know your car insurance is entirely void as soon as you log into a ridesharing app? There are precise criteria around these types of services for insurance coverage that warrants professional advice. 

There are a few other scenarios where your personal car insurance could be voided for business activity.  For example, you should not use your personal car insurance to deliver mail, packages, food, or groceries. Even driving a church van to take people places for church activities requires special insurance. 

 

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Talk to a local agent about your business insurance needs.

It's best to talk with a licensed insurance professional if you have any small business activity. Minor details can have a significant effect on your homeowners insurance. Consider all the variables and nuances to running your small business like sales, vlogging, consulting, childcare and pet care, and handyman services. An independent insurance agent will help you determine the need for separate contents and property insurance. They can also review professional liability risks and other coverage. Then you will have the best protection for your small business without compromising your home and other personal assets.

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