With more Americans launching a side hustle to make ends meet, a growing number of homeowners are likely to face issues with their insurers if the enterprise takes advantage of their home.
According to QuickBooks 2026Entrepreneurship Study, 47% of Americans have made money from a side hustle this year, and the average earnings come to $1,275 per month—or roughly $15,000.
As many Americans struggle with the rising cost of living, it’s only natural to turn to one’s hobbies, skills, or ideas to generate some extra income.
Yet, if considering starting a small business from one’s home, an important question to ask is: Can my homeowners insurance cover all risks involved in my work?
In many situations, the home-based enterprise could actually make one liable and cause issues with the insurer.
“If you are a caterer and have a kitchen fire, a reseller who has a customer trip [on] your porch while picking up an item, or your pipe bursts and you have inventory damage as an online retailer, your claim can be denied, creating a situation where you learned a coverage shortfall when it is too late,” said William Lamman, principal broker at Broadway Insurance Services in Los Angeles.
Lemmon recommended double-checking one’s insurance policy wording and possible exclusions that apply to the specific side hustle one is planning.
Knowing the details of one’s homeowners policy and how can a side-hustle business impact it may save one from many disappointments and losses in the future.
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Side Hustle Insurance Needs & Coverage Limits: What You Need To Consider
A Standard homeowners insurance policy typically contains several exclusions and limitations pertaining to commercial use of one’s home.
This means that the coverages that may apply to ones personal belongings and lifestyle do not extend to any form of business, its inventory, equipment, customers, foot traffic, etc.
“Say a client comes to your home to pick up an item, you use large amounts of inventory at home to fulfill your orders or you run a workshop from your home. As long as the item fits into a reasonable scope, most carriers may allow some coverage,” said Justen Wetmore, Vice President of Claims at Kin Insurance of Chicago.
Depending on what kind of side hustle is pursued, certain terms of a regular homeowners policy can become applicable to it, thus presenting a limited coverage option.
“These scenarios can include, but are not limited to, third-party foot traffic from customers or employees, inventory that resides on the premises, or even utilizing the premises as a means to manufacture the goods or services you plan to sell,” added Wetmor.
In other words, depending on what a side hustle entails, some regular homeowners policies can actually apply to it, presenting a threat of inadequate liability coverage, damage, or theft.
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Workshop Liability Risks & Coverage Gaps: Why You May Not Be Covered at Home
The difference between a side hustle and a business can be quite challenging to identify.
One popular example is woodworking.
A hobbyist who builds furniture only for personal use may not have much to worry about pertaining to their insurance in regards to their woodworking activities.
But, a person who engages in woodworking regularly and sells their items online may require additional coverage.
“A perfect example would be woodworking. Building furniture for your house, sure — that’s deemed a covered hobby. But selling a few a month on Facebook marketplace with $15,000 worth of tools in the garage now creates a workshop the carrier never underwrote and product liability exposure if the table they bought collapses on someone after purchase. Not a catastrophe, but certainly not covered either,” said Lemmon.
According to experts, any sort of foot traffic, business inventory in the house, the tools and equipment one uses for their side-hustle business, or any other aspect of one’s enterprise could factor into one’s homeowners coverage.
One thing to consider is that each of Lemmon’s and Wetmores recommendations above can apply to various forms of side hustles, depending on a particular activity and how it might impede on the coverage provided by one’s homeowners insurance policy.
If someone fails to disclose the details of one’s side hustle to the insurance company when getting the homeowners policy, or when purchasing a policy at a later date, the omission can end up costing dearly.
“Not all claims will be denied if an underlying activity or item is excluded or not covered by the homeowners policy, but it may leave the policyholder with less coverage than they thought and expected,” added Lemmon.
The best way to avoid having to deal with a complicated situation that may jeopardize the side hustle is to speak with the insurance company first.
“Don’t try and hide any material facts or exposures. Tell the insurer or agent what the business is about, or if it might impact the risk rating or coverage of the policy. They are the ones that can best advise what options may be available to help address your exposure and coverages needs,” advises Joshua Lavine, CEO at Capitol Benefits LLC in Gaithersburg, MD.
How To Avoid A Coverage Gap At The Home Office
If one runs any kind of business at home and earns money from it, the insurance company may require additional information, as explained above.
To avoid problems and protect one’s finances, there are certain recommendations to keep in mind.
- Inform the Insurance Company About the Side Hustle
The first and most crucial step is to talk with an insurance agent about the specifics of one’s business, including location, inventory, and foot traffic.
Depending on what equipment is used for the enterprise and where one conducts their business, the company can advise what the limitations and requirements may be.
- Inquire about the Business Endorsement for Homeowners
One option to consider if one runs a small side-hustle business is adding a business endorsement to a homeowners insurance policy to make sure the enterprise is covered.
Depending on the specifics of one’s side hustle, such an endorsement may allow for increased coverage on content and additional liability.
“For small business, adding a commercial endorsement can provide sufficient inventory and liability protection,” suggested Lavine.
The endorsement option may come particularly useful to those on a limited budget since, depending on the carrier, one can be able to acquire extra business coverage at a small cost.
- Business Owner’s Policy May be Worth Considering
If the side hustle requires the involvement of clients on one’s premises, considerable inventory, equipment, or employees, a business endorsement to the homeowners policy may not suffice.
“A BOP can fill the gaps and provide the business coverage the small business may need,” suggested Lavine.
Depending on particular risks that a side hustle presents, a business owner’s policy provides many forms of coverage.
“It will vary based on insurance company, but a BOP, or a small business, owners policy, which starts around $500 to $1,000 per year, is likely your best bet if your side hustle involves clients on premises, inventory or workers,” recommended Lemmon.
- If Necessary, Shop Policy Options With Other Insurance Carriers
Depending on which insurance providers one chooses, there may be limited range of the options concerning a side hustle or a business at home.
If the available insurance options do not accommodate the specific needs of one’s enterprise in a timely manner or cost-efficient way, consulting another independent insurance expert can be highly profitable.
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Side Hustle Insurance Coverage: What Homeowner Should Know
Whether one is an aspiring seller on social media platforms, a small business owner who regularly caters, works with clients on their premises, builds custom furniture, and engages in any other small-scale enterprise work, one should be wary of potential implications of one’s work on an insurance policy.
While a side business may appear to be beneficial in terms of one’s budget, some activities may present an increased liability risk that a standard homeowners insurance may disallow.
Speaking with an insurance agent about the specifics of a side hustle, learning about the details of an own homeowners policy, and acquiring additional coverage, if necessary, will help eliminate any insurance-related worry when engaging in a business or enterprise at home.