Whether you sell on Etsy, consult from a spare bedroom, run an online shop, tutor, or do contract work, a home-based business in Michigan carries real risk — and the most common assumption about it is wrong. Most owners think their homeowners policy has them covered. It almost doesn't. Here's exactly where the gaps are and the affordable ways to close them.
Why your homeowners policy barely covers a home business
A homeowners policy is designed to protect your home and personal belongings, not a business. Two big limits trip people up:
- Business property is barely covered. Most homeowners policies cap business equipment and inventory kept at home at a small sublimit (often around $2,500). If you have a garage full of stock or a few thousand dollars of gear, you're underinsured the moment something happens.
- Business liability is excluded entirely. If a client trips on your porch, a product you sold causes harm, or your work causes a financial loss, your homeowners liability won't respond to a business claim. That gap is the one that can cost the most.
The coverage options that actually fit
- Homeowners business endorsement. The cheapest fix for the smallest operations — raises the business-property limit and adds a bit of liability. Good for a modest side business with little risk.
- In-home business policy. A step up that combines higher property limits with real liability coverage, built specifically for home-based businesses.
- Business Owner's Policy (BOP). Bundles general liability and business property for a growing operation — usually the best value once the business is more than a small side gig.
- Professional liability (E&O). Essential if you give advice or provide a service — consultants, bookkeepers, designers, tutors. General liability won't cover a claim that your work caused a financial loss.
- Commercial auto. If you drive for the business — deliveries, client visits, hauling supplies — your personal auto policy likely excludes business use.
Common Michigan home businesses that need it
Makers and online sellers (inventory and product liability), consultants and freelancers (professional liability), in-home services like salons or daycares (special rules and higher liability), and anyone whose LLC doesn't replace the coverage they actually need. If clients ever come to your home, or you hold inventory there, you have exposure a homeowners policy won't cover.
What it costs
This is the part that surprises people in a good way: a homeowners business endorsement can be quite inexpensive, and even a full in-home business policy or small commercial policy is usually far more affordable than owners expect — often a small fraction of what one liability claim would cost out of pocket. The right level depends on your revenue, your equipment and inventory, and whether customers visit.
Frequently Asked Questions
Does my homeowners policy cover my home-based business?
Only barely. It typically covers a small amount of business property (often about $2,500) and provides no business liability coverage at all, so most home businesses have a real gap.
What's the cheapest way to cover a small home business?
For a low-risk side business, a homeowners business endorsement is often the most affordable option. As the business grows, an in-home business policy or a Business Owner's Policy gives much broader protection.
Do I need coverage if customers never come to my home?
Usually yes. Even a fully online business has equipment and inventory to protect, and can face product or professional liability claims — neither of which your homeowners policy covers.
The bottom line
A home-based business is still a business, and your homeowners policy was never built to protect one. The good news is that closing the gap is usually cheap relative to the risk — often an endorsement or a modest standalone policy. The single most important step is matching the coverage to what you actually do and what you keep at home. Tell us about your business and we'll build the right protection across our Michigan carriers, usually for less than you'd guess.