From tax prep and tutoring to candle making and piano lessons, more and more people are running small businesses right out of their homes. But here's a question you might not have considered: what happens if something goes wrong? Will your homeowners insurance cover it?

The short answer: not by default.

Most homeowners insurance policies exclude property and liability coverage for anything related to business operations. That’s where Incidental Business Coverage may come into play—but it’s not a catch-all, and it’s not available for every type of business.

What is Incidental Business Coverage?

Incidental Business Coverage is an add-on that some insurance companies offer to extend limited coverage to qualifying home-based businesses. It can provide protection for both liability (if someone is injured during business activity) and property (like your business equipment or inventory) under your existing homeowners policy.

But—and this is a big but—it’s only available for certain types of small, low-risk operations.

What kinds of businesses may qualify?

Typically, eligible businesses must meet strict criteria. While the specifics vary by insurer, general requirements often include:

• The business is owned solely by the homeowner or a household member

• It has no employees outside the household

• It’s operated primarily from the home

• It poses a low risk of injury or loss

Examples of businesses that might qualify include:

• Musical instruction

• Tax prep or bookkeeping

• Arts & crafts sales

• Home-based product sales

• Light tailoring or dressmaking

Businesses with higher risks—like those involving manufacturing, physical labor, or regular customer foot traffic—typically need a separate commercial policy.

Why it matters:

Without the right coverage, your business activities could leave you vulnerable. If a client trips in your home or your business tools are stolen, you might be footing the bill yourself. Incidental Business Coverage offers a way to bridge that gap—for the right kind of operation.

What’s next?

If you run any type of business out of your home—even part-time—it’s worth checking in with us. We can help determine if your business is eligible for coverage under your homeowners policy, or if a separate small business policy makes more sense.