Operating a business from home offers convenience, flexibility, and lower overhead costs. But have you accounted for the risks involved? Just because your office is under one roof doesn’t mean you’re immune to accidents or lawsuits. 

This blog explores whether a home-based business really needs general liability insurance, what it covers, how much it costs, and how to pick the best option. Let’s dive into protecting your livelihood without breaking the bank.

What Is General Liability Insurance?

General liability insurance – also called commercial general liability (CGL) – is the foundation of business insurance. It protects against third-party claims involving bodily injury, property damage, personal injury (like defamation), and medical costs. In business contexts, it covers events such as slips on your property, accidental damage to someone else’s property, or advertising mishaps.

Why Standard Homeowners Insurance Isn’t Enough

Your homeowners’ insurance typically excludes business-related claims. If a customer is injured during a visit, or your business equipment is stolen, your home policy likely won’t pay. Moreover, some events tied to business operations – like gear breakdowns or stock loss – are explicitly excluded . That leaves home-based entrepreneurs exposed to potentially devastating out-of-pocket costs.

Do Home-Based Businesses Actually Need It?

Most experts agree: yes.

• If clients, customers, or vendors visit your home, you’re exposed to liability risk. Without coverage, a single slip-and-fall accident could become a lawsuit.
• If your work involves professional services or you offer advice, you also need professional liability insurance (errors & omissions) to protect you from negligence claims.
• A Business Owner’s Policy (BOP) can bundle CGL with protection for your business equipment and income, often at a lower rate.

Low-risk side hustles may get away with endorsements or riders added to existing policies, but growing operations with foot traffic, inventory, or extra staff absolutely need standalone coverage.

Coverage Types For Home-Based Businesses

1. Commercial General Liability (CGL)
   • Protects from lawsuits tied to injury or property damage involving third parties.
2. Professional Liability (E&O)
   • Eyes negligence or errors in services provided. Crucial for consultants, accountants, IT pros, etc.
3. Business Personal Property
   • Covers theft or damage to business-owned equipment – beyond what your homeowners policy might include.
4. Business Interruption
   • A component of BOP coverage that replaces lost income if business is disrupted by covered peril.
5. Commercial Auto(if applicable)
   • Required if you use a personal vehicle for deliveries or business transport.

How Much Does It Cost?

• CGL policies for home-based businesses generally run between $250–$500/year for $1 million in coverage.
• A rider or endorsement might cost just $100/year, with limited protection – usually up to $2,500 of coverage.
• Standalone E&O, equipment insurance, and BOPs vary by business type, risk level, and location. Basic plans start around $11–$40/month up to several hundred per month.

Choosing The Right Coverage

1. Evaluate your exposure: home visits, clients, inventory, equipment, or business vehicles.
2. Decide on policy structure:
   • Add-on endorsement: low cost, but low limits.
   • Standalone CGL: essential minimum for client interactions.
   • BOP: broad protection including equipment, liability, and income loss.
   • E&O: for service-based and advisory businesses.
3. Shop around: quotes differ; bundling policies can save money. Consult a broker to tailor coverage.

Frequently Asked Questions

What qualifies as a “home-based business” for insurance?

A home-based business is a self-owned operation run primarily from your home – even if you visit other sites, use your dining table as an office, or work from your garage. This differs from working remotely for an employer, where the employer owns the equipment and controls liability insurance, not you.

Do I need to tell my home insurer about my business?

Yes. Most standard homeowners policies don’t cover business-related activities or equipment, and failing to disclose your business can void your insurance. Some insurers offer endorsements or extensions that add limited coverage – but you must ask explicitly to ensure you’re protected.

How much general liability coverage should I get?

Many small home-based businesses start with $1 million per occurrence and $2 million aggregate limits. Some may opt for less, like $200K/$500K, especially for low-risk operations – but you’ll want higher limits if you have clients visit, use expensive equipment, or sign contracts requiring insurance.

Are there optional coverages I should consider alongside general liability?

Absolutely. Popular add-ons include professional liability (E&O) – for service-oriented work (consulting, advising) to protect against negligence claims, business personal property – Covers damaged or stolen equipment and inventory, business interruption – compensates for lost income if your business shuts down due to covered events like fire, and commercial auto – needed if you use your vehicle for business-related travel, deliveries, or errands.

Is business insurance required by law for home-based businesses?

Legally, no, you’re not mandated to carry general liability insurance. However, many clients or landlords require it in contracts, and for certain licenses or loans, you’ll need to show proof of coverage. Without it, you’re personally liable – even if your business is small.

Safeguard Your Home-Based Businesses With The Right Insurance

Running a home-based business doesn’t eliminate risk – it just relocates it. General liability insurance, often bundled with a Business Owner’s Policy, offers critical protection for injuries, property damage, and lawsuits arising from your business. Without it, a single accident could cost far more than your annual premium, even threaten your home and savings.

If you’ve built your dreams from your kitchen table, make sure they’re legally protected. Explore general liability and BOP options today to secure your business’s future. Visit General Liability Insurance US to compare tailored policies and get peace of mind for your home-based enterprise.