COVID-19 hasn’t changed the fact that many successful entrepreneurs and small business owners are operating their business from the comfort of their homes.

But just because you can run your business wearing slippers, doesn’t mean that it’s not a real business. And as such, it needs to be insured just like any other brick and mortar operation. 

Home-based business owners need to know that neither homeowner’s nor tenant’s insurance policies cover home-based businesses. This includes inventory, materials, equipment, tools, and more. Why? Your home insurance is designed to protect your personal property, not your business. 

Therefore, if you run a business out of your home, it’s wise to work with an insurance professional at Cayuga Mutual who can provide you with more details regarding the types of business or commercial insurance that is available for your home-based business. 

Before we get into exploring the question of why you would need business insurance for your home-based business, we first need to understand what we mean by home-based business insurance. 

What Is Home Based Business Insurance? 

Let’s start here. A home-based business is a business where the primary office is located out of the same premise that the business owner lives.  

That seems pretty straightforward, so what is the insurance part?  

A home insurance policy offers a small amount of coverage for things like books, tools, instruments, etc. that may be necessary for a business, or occupation. However, these limits are often not enough. The insurance portion of home-based business coverage is designed to cover the business beyond what a homeowner’s or tenant’s policy does. 

Why You Need Home-Based Business Insurance?

While home-based businesses may operate on a small scale, they face many of the same risks as their larger counterparts. These include third-party claims, auto accidents, and damage to company-owned property. To protect themselves from losses, home-based business owners must purchase adequate insurance. 

If you operate your business from your home, your home insurance won’t cover anything related to your business. This includes inventory, materials, equipment, tools, and more. Why? Your home insurance is designed to protect your personal property, not your business.  

What Does Business Insurance Cover for Home-Based Business? 

The type of coverage you need for your home-based business will depend on your business or industry. Some types of home-based business insurance include: 

1. General Liability Coverage: This coverage would safeguard you from any kind of liabilities for physical or financial harm to others caused by your home-based business. For example, it can protect you from claims filed against you for an accident that injured a client or a customer while they were at your home for business purposes. 

2. Professional Indemnity Coverage: Also known as Errors and Omissions coverage, this protects you when a client or customer claims that your service, product, or advice was poor/negligent, and led to physical damage, emotional distress, or monetary losses. For example, if you’re a doctor running a private practice from home, this coverage protects you from claims of medical negligence that led to the death of a patient.  

3. Damage to Business Property Coverage: Just like the home insurance policy that covers damage to the home and its possessions, this type of business coverage is essential to safeguard damage to business property. It protects business premises, equipment, inventory, finished products, etc. from fire, flooding, theft, and more. This coverage varies depending on the type of business you run, the type of equipment and raw materials you use, and where you conduct your business. If you’re running a home-based business, you’ll still need a home insurance policy to safeguard your personal possessions.  

4. Business Interruption Coverage: This type of coverage ensures the continuity of your business income in case of losses incurred due to damages to the business premises, equipment, inventory, products, etc. For example, let’s say there’s a fire at your house. The business insurance provider would pay a sum for the loss of business that resulted from damage to your business property.  

5. Employer Liability Coverage: If you hire someone as an employee or an intern to help you with your business, this coverage pays for any injuries that they might sustain while working for your business. 


So, does your home-based business need insurance? Based on the vast number of potential business liabilities, you’re probably better off having at least a combination of a few policies in place, depending on your business needs. And that could be one less thing to keep you up at night—even if it’s in your home-office. 


Our experienced commercial and business insurance agents are well equipped to advise you about your home-based business insurance needs. We can answer your questions, help you save money, and advise you on risk management. Contact us today for a commercial or business insurance quote or with your questions.