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Navigating the Insurance Maze: Homeowners vs. Commercial Policies for At-Home Businesses and Side Gigs

In today's rapidly changing job landscape, more people are turning to at-home businesses and side gigs to supplement their income or pursue their entrepreneurial dreams. Whether you're crafting handmade jewelry, offering freelance services, or running a small e-commerce operation out of your home, understanding the insurance implications is crucial. In this comprehensive guide, we'll explore the differences between homeowners and commercial insurance policies and how they relate to at-home businesses and side gigs.

At Home Business and Side Gigs

The Insurance Dilemma


Before delving into the specifics, it's essential to recognize that homeowners insurance and commercial insurance are designed for distinct purposes. Homeowners insurance is primarily intended to protect individuals and families and their residential properties, while commercial insurance is tailored for businesses, whether they operate from home or in a separate commercial space.


Key Differences Between Homeowners and Commercial Insurance


Homeowners Insurance

Commercial Insurance

Target Audience

Individuals or families who own and occupy residential properties

Businesses and commercial property owners


Protect homeowners from financial losses due to perils like fire, theft, and natural disasters

Protect businesses from various risks and liabilities associated with commercial operations

Coverage Components

Dwelling, Personal Property, Liability, Additional Living Expenses, Medical Payments to Others

Commercial Property, General Liability, Business Interruption, Workers' Compensation, Professional Liability, Commercial Auto, and more (customizable)

Cost Determinants

Location, Home Value, Deductible, Coverage Limits

Industry, Location, Coverage Needs, Number of Employees


Let's dive deeper into how these differences relate to at-home businesses and side gigs.

At-Home Businesses and Homeowners Insurance: 

Coverage Limitations—While homeowners insurance provides coverage for your home and personal belongings, it typically has limitations when it comes to business-related assets. If your at-home business involves expensive equipment, inventory, or valuable tools, your homeowners policy may not fully cover their replacement or repair in case of damage or theft. This limitation can leave you vulnerable to substantial financial losses.

Liability Risks—If you're running a business out of your home, there's a chance that clients or customers may visit. In such cases, your homeowners insurance may not provide adequate liability coverage for business-related accidents or injuries that occur on your property. This could potentially lead to personal financial liability.

Home Office Coverage—Some homeowners policies offer limited coverage for home offices, but this coverage is typically designed for small, incidental business use. If your at-home business or side gig is a significant source of income or involves more substantial operations, you may need additional coverage.


As your at-home business or side gig grows, you may find that your homeowners insurance is no longer sufficient. Transitioning to commercial insurance can provide the protection your business needs. Here's how it relates:

Comprehensive Business Coverage—Commercial insurance offers a wide range of coverages tailored to the needs of businesses, including property insurance to protect business assets, general liability insurance to cover accidents and injuries, and business interruption insurance to mitigate financial losses during disruptions.

Legal and Regulatory Compliance—Depending on your industry and location, certain business activities may require specific types of commercial insurance for legal compliance. For example, if you have employees, workers' compensation insurance may be mandatory in your area.

Protecting Your Personal Assets—One of the key benefits of transitioning to commercial insurance is that it helps protect your personal assets. In the event of a lawsuit or significant loss related to your business, your personal finances and property can remain shielded from potential claims.


Key Considerations for At-Home Businesses and Side Gigs


When it comes to insurance for at-home businesses and side gigs, here are some important considerations:

Assess Your Business Needs—Evaluate the nature and scope of your at-home business or side gig. Consider factors like the value of business assets, the potential for client or customer visits, and any legal or regulatory requirements in your industry.

Consult with an Insurance Professional—To navigate the complexities of insurance, it's wise to consult with an insurance professional who specializes in small business insurance. They can help you understand your unique insurance needs and find the right coverage options.

Policy Customization—Commercial insurance policies can be highly customized to fit your specific business requirements. You can tailor your coverage to include property protection, liability coverage, and more, ensuring that you have comprehensive protection.


Candle Business

Example: Etsy Shop Owner

Let's consider a real-world example to illustrate the insurance considerations for at-home businesses and side gigs. Imagine you run an Etsy shop selling handmade candles. At first, it's a small operation, and you're creating the candles in your home. Here's how your insurance needs may evolve:

1. Starting Out: Initially, your homeowners insurance may provide sufficient coverage for your hobby-like business. However, as your shop gains popularity, you start receiving more orders and purchasing larger quantities of supplies. Your inventory and equipment are now worth thousands of dollars.

2. Expanding: Your business grows, and you decide to dedicate a room in your home exclusively to candle making. This room is filled with equipment, supplies, and inventory. Your homeowners insurance may not adequately cover these business assets.

3. Liability Concerns: You host a candle-making workshop for local customers in your home. During one of the workshops, a participant accidentally spills hot wax on themselves and sustains minor burns. They decide to file a liability claim against you. Your homeowners insurance may not cover this business-related liability claim.

4. Transition to Commercial Insurance: At this point, you decide it's time to transition to commercial insurance. You opt for a business owners policy (BOP) that includes property insurance to protect your equipment and inventory, as well as general liability insurance to cover potential lawsuits related to your business activities. This transition provides you with peace of mind and ensures that your business is adequately protected.



In conclusion running an at-home business or side gig can be a rewarding venture, but it's crucial to understand the insurance implications to safeguard your financial well-being. While homeowners insurance may suffice for very small and low-risk ventures, as your business grows, it's wise to consider transitioning to commercial insurance to ensure comprehensive coverage and protect your personal assets.


At the Voss Law Firm we strive to help you get back to normal as fast as possible after an insurance denial or “low ball” offer. If you feel you have been unfairly treated by your insurance company, please call (888) 296-1986, input your information for a Free Claim Review or chat with us today.


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