Does Homeowners Insurance Cover a Home-Based Business in Connecticut?

Short answer: Very little. A standard homeowners policy typically limits business property at home to about $2,500 and business property away from home to about $500, and it excludes liability arising from business activities. If clients visit, you hold inventory, or you have expensive equipment, you need a home-business endorsement, an in-home business policy, or a business owners policy.

What a homeowners policy does not cover

• Business property: laptops, cameras, tools, inventory and supplies used for the business are subject to low sublimits.
• Business liability: a client tripping on your stairs during a meeting, a product you sold injuring someone, or advice that causes a financial loss is generally excluded.
• Lost income: if a fire closes your home office, the homeowners policy pays your extra living costs, not your lost business income.
• Business data: restoring client records or responding to a data breach is not homeowners coverage. Connecticut's breach notification law applies to businesses of every size; see cyber liability for Connecticut businesses.

Three ways to cover a home business

• Home-business endorsement: some carriers add limited business property and liability to the homeowners policy for low-risk, low-traffic businesses such as a bookkeeper or tutor. Inexpensive, but eligibility is narrow.
• In-home business policy: a separate policy with higher property and liability limits, and often some business income coverage. Suits consultants, designers and small online sellers.
• Business owners policy (BOP): property, general liability and business income in one package, built for businesses with customers, inventory or employees. See the BOP explained for Connecticut businesses.

Coverage people forget

• Professional liability if you give advice or provide a professional service. A general liability policy will not cover a claim that your work caused a financial loss. See professional liability in Connecticut.
• Commercial auto or business-use endorsements if you drive to clients or make deliveries.
• Workers' compensation as soon as you hire your first employee; Connecticut requires it for employers with one or more employees. See Connecticut workers' comp requirements.
• Product liability for crafters and food businesses selling at markets or online; many markets require a certificate of insurance.

Should I tell my homeowners insurer I run a business?

Yes. Undisclosed business activity can complicate a claim, especially a liability claim involving a client. Disclosure rarely causes problems for quiet, low-traffic businesses, and it lets the insurer offer an endorsement. Heavier activity, such as daycare, client-facing services or manufacturing, usually needs a separate commercial policy; family daycare in particular is commonly excluded from homeowners policies.

New England Insurance, an independent agency in Bridgeport serving Connecticut since 2012, writes both personal and commercial lines and can coordinate the two so nothing falls between them. Request a review or explore commercial insurance.