Home-based businesses face potential homeowners insurance gaps

With nearly one in three Americans engaging in side hustles and approximately 19 million U.S. businesses operating out of homes, many entrepreneurs face significant insurance vulnerabilities. Standard homeowners and renters insurance policies are typically designed for personal use and personal liability rather than commercial activity.

Dennis Shirshikov, a professor of finance and economics at City University of New York/Queens College, notes that while these policies may offer limited coverage for business equipment, they often exclude professional mistakes, lost income, inventory, customer claims, and business-related injuries. A major risk for home-based business owners is the potential for denied claims if an insurance carrier discovers business operations are being conducted on the property without prior notification.