Insurance Coverage 101 for At-Home Businesses

As we live in a day-to-day world dominated by technology companies such as Apple, Inc., it may surprise some to know that this multi-billion dollar corporation was created out of cofounder, Steve Jobs’ very own garage.

Like Apple, Inc., a successful business usually starts with an innovative idea and can begin in the business owner’s home. However, at-home businesses are not as protected by homeowners insurance as one may hope and thus business owners have other options to ensure more protection provided by insurance coverage. Let’s take a look at what is and is not covered by a California homeowners quote and what alternative options are available for business owners.

The most common homeowner’s policy is a Standard California Homeowners 3 (HO3) policy. This policy provides its Special Form to the insured that highlights the specific coverage’s under such a policy. It is in the Special Form that explains what business related coverage’s are included and excluded. In general, HO3 policies exclude general business coverage. Business is defined by the HO3 Special Form as any “full-time, part-time, or occasional” “trade, profession, or occupation” or any operation “engaged in for money or other compensation” ( In other words, your HO3 policy will cover your home structure, personal contents, and personal liability but does not cover, and usually even specifically excludes, any activity that is conducted in your home that is associated to your business. This exclusion of business activity also applies to the “other structures” coverage in your HO3. Your homeowners insurance will cover damage to “other structures” such as sheds and garages but will not cover a business run out of these structures.

HO3 policies do give coverage to business items/electronics that are principally used for your business; however this coverage is very minimal and does not include specialized equipment for your business or business data.  Also, if your customers pay your business via credit card transactions, your HO3 will not cover any credit card loss related to your business.

Additionally, personal liability coverage under your HO3 policy only refers to personal use and does not cover liability for business operations. Similarly, medical payments coverage does not cover bodily injury or property damage associated with any business conducted in the home.

Also, professional services and property damage from others in relation to business activity is excluded from an HO3 policy. So, as can be seen, an HO3 policy does not provide much coverage for an at-home business. Not only that, but an HO3 policy lacks sufficient coverage for at-home business employees as well. In fact, HO3 policies only provide employee coverage, if any, to residence employees; however this coverage is still very limited. The HO3 Special Form defines a residence employee as an individual whose responsibilities involve repairing, up keeping, or using the “residence premises”; such as housekeepers, nannies, or gardeners.

However, coverage for residence employees does not include personal property, business property, or workers’ compensation. In some states, such as California, require all employers to have a workers’ compensation policy and failure of a business owner to provide this to his/her employees can result in a criminal charge. Thus a California workers’ compensation quote must be written separately from your HO3 policy to meet these requirements and/or provide this additional coverage for your employees.

It is clear then that an HO3 policy is not enough for most businesses to provide adequate insurance coverage and protection.  If you are seeking ample coverage for your entire business, a great option is a California Business Owners policy (BOP) quote. This policy offers liability and property insurance coverage for many common businesses. To further your coverage, other options to consider include quotes for Professional Liability policy, a Commercial Automobile Liability policy, and, as mentioned, a Workers’ Compensation policy; all of which may or may not be included in a BOP depending on the carrier. Continually, there are even more options available to at-home businesses that may not qualify for a BOP, so it is important to talk to your insurance broker or carrier to find the best coverage that is tailored to fit your business’ needs. Call us here at JVRC Insurance Services if you would like a quote, have any questions, and/or have concerns. We would be happy to help in any way we can.

Protecting your business is vital in sustaining your livelihood for your family, your future, and the innovative idea you have been nurturing in your at-home business that can possibly revolutionize an industry. Find the right business insurance coverage for you and enjoy the protection and peace of mind that comes with it.