If you run a business out of your house, your homeowners policy probably wasn’t written with that business in mind. Most homeowners policies treat business property as a small special limit, and the Insurance Information Institute (Triple-I) puts the typical figure at about $2,500 for business equipment in the home and $250 away from it. Business liability, like a client who trips on your front steps, usually isn’t part of the policy at all.
That surprises people, because the house is the same house and the laptop is the same laptop. What changes is how the policy reads the situation.
Why this comes up so often around Murray
Calloway County is full of small, one-person operations. According to the Census Bureau, the county had 2,850 nonemployer businesses in 2023, meaning businesses with no paid employees, compared with 906 employer establishments. That’s roughly three to one. The Census Bureau notes most nonemployers are self-employed people running unincorporated businesses.
In practice, that’s the photographer working Murray State graduations, the baker with a table at the farmers market, the person reselling furniture out of a garage in Hazel, the lawn care side hustle, the tutor with students coming to the kitchen table. Plenty of them started as a hobby, and the insurance never caught up with the income.
How homeowners coverage typically handles business use
Most homeowners forms separate personal property from business property. Personal belongings get the policy’s full personal property limit. Property used for business usually falls under a much smaller special limit, and the Triple-I figures above are a common range.
As an example only: a photographer with $7,000 of camera bodies and lenses, stored at home and used for paid shoots, could be looking at a special limit well below what the gear is worth. And the $250 away-from-home figure matters for anyone whose equipment rides in the truck to a job.
The bigger gap is usually liability. Triple-I notes that homeowners coverage usually doesn’t extend to business-related liability, such as a customer or supplier injured on your property. That’s the difference between a friend slipping on the porch and a paying client slipping on the same porch. Same steps, very different conversation.
Triple-I also points out that a homeowners policy generally won’t replace lost business income if damage to the house stops you from working, or cover money you can’t collect because your business records were damaged.
Where policies vary
This is an area where carriers really do differ, which is why I’m careful with it.
- Home business endorsements. Some carriers offer an endorsement for an incidental business run from the home. What counts as incidental is defined by each company. Triple-I gives the example of some carriers drawing the line at a business grossing under $5,000 a year.
- Separate business policies. A standalone general liability policy, business property coverage, or both, written for the business itself.
- A businessowners package policy. Often called a BOP, it combines property and liability for smaller businesses in one policy.
Which of these fits depends on what the business does, how much equipment is involved, and whether customers come to the house. Renters have the same question, and renters policies vary on it too. Our renters insurance guide for Murray covers the basics of that policy.
Once you hire someone, the question changes again. Kentucky’s workers’ comp law applies to most employers once they have a single employee, with limited exceptions such as businesses engaged solely in agriculture. This post on one-employee businesses walks through it.
What to look for on your own policy
Pull out your homeowners policy and look for three things:
- The special limit for business property. It’s often listed in the personal property section, alongside limits for things like jewelry or firearms.
- How the policy defines “business.” Some definitions turn on whether you earn money from the activity, and some set a dollar threshold.
- Business exclusions in the liability section. This is where the customer-on-the-porch question usually gets answered.
Your policy wording is the thing that answers all three, and it’s worth reading before a busy season rather than after a claim.
If you’re running something out of your house anywhere around Murray, our general liability page explains how we approach small business coverage, and we write it through several carriers, including The Hartford and Liberty Mutual. The easiest next step is to send us your current dec page and a sentence or two about what the business does, and I’ll tell you what I see.
This article is general information about how coverage typically works, not advice about your specific situation. Every policy reads a little differently, and yours is the only thing that says what you have. If you’d like a second set of eyes on it, send us your current dec page and we’ll walk through it with you.
