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Small Business

Home business insurance: Business property vs. homeowners coverage

Matt Nezamabadi image
By Matt Nezamabadi
Apr 17, 2021 min read

The line between homeowners insurance and business property insurance can be blurry if you have a home-based business.

Your homeowners policy may provide some coverage for your business property, but limits are typically low. And it may not be enough if the value of the property is more than a few thousand dollars.

Home business insurance can help protect everything you need to run your company with much higher limits than those provided by homeowners insurance. And it offers additional protection homeowners insurance doesn't have.

What does homeowners insurance cover?

Homeowners insurance is meant to protect your home and personal possessions.

If your house burns down in a fire or a tree comes crashing through your roof, the insurance company will help you cover costs to repair or replace your personal belongings and the physical structure of your home.

But most homeowners insurance policies only cover business property up to $2,500. So if that same tree comes crashing through your roof and destroys the equipment you use in your business, your insurer will reimburse you up to the policy's limit for business property.

If you only need a laptop and some basic office supplies, that might be enough. 

You might need business insurance if you have more than $2,500 business equipment at your home

If you have special business equipment, office furniture or inventory stored in your home, you probably need more coverage than what your homeowners insurance can provide.

For example, let's say you're a photographer and you have a studio in an extra bedroom or garage at your home. The tree destroys your camera, lighting, backdrops, props and other equipment. If you don't have commercial property insurance, your homeowners insurance is unlikely to reimburse you for everything you lost.

If the limit isn't high enough to cover all the property that was damaged, you'll have to pay the difference to replace your equipment so that you can get back to work.

If you keep business supplies somewhere other than your home, such as in your car or a storage unit, the coverage limits in a homeowners insurance policy are typically even lower.


What does commercial property insurance cover?

Commercial property insurance helps protect all the things you need to do business. Plus, it covers things homeowners insurance doesn't. Here are three types of coverage commercial property insurance offers that can help protect your home-based business: 

  • Goods, gear and inventory (also known as business personal property coverage): Helps cover all the stuff you need to do business, including computers, furniture, equipment, custom upgrades, inventory and more. Unlike homeowners insurance, BPP coverage offers limits that are high enough to protect all — not just a portion of — your property. And it covers you whether your stuff is in your home or not.
  • Business income coverage: Helps replace lost income if you need to temporarily suspend your business operations because of a covered event such as a fire or burst water pipe. It can also help pay for routine operating expenses such as utilities.
  • Equipment breakdown coverage: Protects against mechanical failures, such as short circuits, power surges and loss of air pressure, that cause a piece of equipment to malfunction.

Curious about how commercial property insurance works in real life? Here are a few examples.

Let's say you've converted your garage into an office and storage space for your E-commerce business. A fire breaks out, destroying your office equipment and product inventory. Business personal property coverage helps pay to replace the equipment and supplies you need to get your business back up and running.

But it's going to take several weeks to repair the damage to your basement and get the new equipment you need to replace the items that were destroyed. Business income coverage can help replace your lost income and pay for everyday operating expenses until you can start working again.

How to get the coverage you need with commercial property insurance from Next

Getting property insurance for your home business is easy with Next — and you can do it all online in less than 10 minutes.

We'll ask you some basic questions about your business, such as where it's located, what industry you're in and your expected annual revenue, so we can give you a quote. If you like what you see, you can select your coverage and purchase a policy.

As soon as you've made a payment, your certificate of insurance will be available online. If you have questions, our licensed, U.S.-based insurance professionals are available to help.

Get your in-home business insurance quote today.

Matt Nezamabadi image
By Matt Nezamabadi
Matt Nezamabadi is the commercial property insurance product lead at Next Insurance.
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