Working from home stopped being a novelty years ago. Whether you are a full-time remote employee, a freelancer, or someone running an online shop out of a spare bedroom, the odds are good that your homeowners policy was written for a household, not a business — and it draws that line more sharply than most people expect. Here is where a standard policy stops, what it will and will not pay for, and the three ways to close the gap.

The business-property sublimit

A standard homeowners policy covers your belongings under its contents section, but it caps anything used primarily for business at a small fixed amount. On the current edition of the ISO Homeowners 3 form, the template many insurers build their policies on, that cap is $2,500 for business property kept at the residence and $1,500 for business property away from it. Older editions of the same form allowed only $250 away from home, so the off-premises number has improved; the on-premises number has not moved.

Twenty-five hundred dollars does not go far. A laptop, a monitor, a camera body and a couple of lenses can clear it before you count inventory, tools or a workshop in the garage. Business data stored on drives or media is excluded from the contents coverage outright, so the hard drive holding your client files is not covered as personal property at all. If the house burns, the policy rebuilds the structure and replaces the household goods; it does not rebuild the business.

Liability is the bigger hole

The property sublimit is the part people notice. The exposure that can actually wreck you is liability. The personal liability section of a homeowners policy is designed for the neighbor who slips on your icy steps, not for a client who trips on the way to a meeting in your home office, a delivery driver hurt picking up your shipments, or a customer injured by a product you made at the kitchen table. Claims that arise from business activity are generally excluded from a personal policy, which means a lawsuit lands on you with no insurer paying the defense costs.

The test is not whether you have a storefront. It is whether money changes hands. A remote employee on a company-owned laptop who never sees a client has relatively little at stake. A hairdresser, a tutor, a daycare provider or a woodworker with foot traffic and paying customers is running a business in the eyes of the policy no matter how small the revenue is.

Three ways to close the gap

The Insurance Information Institute lays out a ladder of options, and the right rung depends on how big the operation is.

  • An endorsement on your homeowners policy. The cheapest fix. For as little as about $25 a year, according to the Insurance Information Institute, you can raise the business-property limit from $2,500 to $5,000, and the limit can be pushed to $10,000 in $2,500 increments. Some endorsements also add limited liability coverage for clients who visit your home. This fits a solo operation with modest equipment and occasional visitors.
  • An in-home business policy. A step up, written for businesses with generally up to three employees. It carries higher property limits, real business liability, and business-interruption coverage that replaces income if a covered loss shuts you down — the piece a homeowners endorsement never includes.
  • A business owners policy, or BOP. The broadest option, bundling property and liability for a small business the way a homeowners policy does for a household. It does not include workers’ compensation, health or disability coverage, which are bought separately once you have employees.

Whichever rung you choose, tell your insurer what you are doing at home. Coverage bought on a misdescribed risk is coverage an insurer can contest when the claim comes in, and the conversation is far cheaper before a loss than after.

Renting out the space is a business too

Home-sharing has its own exclusions. The contents coverage on the standard form does not apply to property rented or held for rental to others away from the residence, or to property in an apartment that an insured regularly rents to others, beyond a small allowance for a landlord’s furnishings. In plain terms: if you list a basement apartment or a spare room for short-term stays, the furniture in it and the liability that comes with paying guests are not what your policy was priced for. Ask your insurer before the first booking. Whatever protection a listing platform advertises to hosts, it is not your homeowners policy, and it does not change what your policy excludes.

What to do this week

  • Inventory the business side. Photograph the equipment, save receipts, and total what it would cost to replace everything at today’s prices. If the number is above $2,500, you have already outgrown the standard policy.
  • Count the visitors. Clients, students, customers, couriers. Any regular foot traffic tied to income calls for business liability, not a personal policy.
  • Price the rungs. Get quotes on the endorsement, an in-home business policy and a BOP from your current insurer and at least one other. The cost difference between them is often smaller than the coverage difference.
  • Revisit it annually. Side hustles grow. The endorsement that fit a first year of freelancing may not fit the year you hire help or start stocking inventory.

None of this changes the advice for the personal side of the policy; the ways to trim that premium are in our guide to saving on homeowners insurance in 2026. And if you rent rather than own, check your renters policy for the same business sublimits — how renters insurance protects your belongings covers the personal side of that coverage.