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 and making a little money on the side at the same time was appealing. I signed up to be an official party consultant and did 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. Right?
I was completely mistaken—and I now know I may have been unintentionally putting my homeowners policy at risk. Today, running a business from home or starting a side hustle is a common way to earn extra income. That makes it especially important to protect those activities with the right insurance so you are not unknowingly exposing your household’s financial security.
Why Home Insurance Does Not Cover Your Small Business
Homeowners insurance is designed to protect your residence and personal belongings, not to cover business operations. If you file a claim for something that occurs during business activity and your insurer is unaware of that business, you could risk invalidating your policy. To decide whether you need separate coverage for your small business, it is important to look closely at your business property and your liability exposure.
Business Property vs. 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. Consider a few questions to help you determine if you need separate coverage for your business.
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
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.
Talk to a Local Agent About Your Business Insurance Needs
It is wise to consult a licensed insurance professional if you have any small business activity. Even minor details can significantly affect your homeowners coverage. Think about all the ways you operate your business—whether through sales, vlogging, consulting, childcare or pet care, or handyman services. An independent insurance agent can help you evaluate whether you need separate contents and property coverage, review your professional liability exposures, and recommend appropriate policies. This guidance can help you protect your small business while safeguarding your home and other personal assets.
THE NORTHERN NECK INSURANCE INTEGRITY PROMISE — We pledge to provide straight talk and good counsel from our NNINS Virginia insurance experts through our blog. While we hope you find this to be a helpful source of information, it does not replace the guidance of a licensed insurance professional, nor does it modify the terms of your Northern Neck Insurance policy in any way. All insurance products are governed by the terms in the applicable insurance policy.
