Making extra money while working from home is great, but there are plenty of considerations to plan for—like changes to your insurance.
Side hustles are now the norm.
In fact, about 47% of Americans have earned income from one this year, according to the 2026 Entrepreneurship Study by QuickBooks. And on average, they make $1,275 per month or roughly $15,000 per year.
With the rising costs of just about everything, it’s easy to see why many people are choosing side hustles to boost their income.
Whether you’re a homeowner who’s already jumped on the side hustle bandwagon—or think you will soon—be careful, as your venture could jeopardize your home insurance policy.
“If you’re a caterer who has a kitchen fire, a reseller with a customer who trips [on] your porch while picking up an order, or your pipe bursts and damages inventory for your online retail business, your claim may get denied, and that’s the moment you discover a void in your coverage,” explains William Lemmon, principal broker at Broadway Insurance Services in Los Angeles.
By understanding the potential implications of your side hustle on your home insurance, you can avoid costly coverage gaps and unwanted financial losses down the road.
How a side hustle could affect your home insurance
A residential homeowners policy contains specific provisions and exclusions regarding "business use" that you need to understand if you’re running a home-based side hustle.
“For example, if you operate a business that involves storing large amounts of inventory on the home's premises, you could be limited to a very small amount of coverage (typically $2,500, but sometimes even less) in the event of a loss that damages these items,” explains Justin Wetmore, vice president of claims at Kin Insurance in Chicago.
According to Wetmore, exclusions or situations your home insurance policy specifically says it won't cover are typically triggered when you conduct regular—or even occasional—business activities on the property.
“This could include, but is not limited to, third-party foot traffic from customers or employees, storing business inventory on the premises, or using your property to make the products you sell,” Wetmore says.
If your side hustle involves any of these things, your insurer may view it as a business rather than a hobby and limit or exclude coverage accordingly.
“Woodworking is a perfect example. Building furniture for your house? Covered hobby. Selling a few pieces a month on Facebook marketplace with $15,000 worth of tools in the garage? You now have a workshop the carrier never underwrote and product liability exposure if a table you sold collapses on someone,” says Lemmon.
Failing to report business operations to the insurer on your initial application or omitting updates before starting a home business can trigger adverse actions as well.
Ways to protect yourself financially
To ensure full protection while pursuing a side hustle at home, the first step is to be transparent and disclose your home-based side hustle right away.
From there, consult your insurance agent or company. They can help you secure the proper endorsements or policy updates for your specific business.
“Don't try to hide any material facts. Let the insurer or agent evaluate your risk and coverage and let you know if there are any concerns,” says Joshua Lavine, CEO at Capitol Benefits LLC in Gaithersburg, MD.
For small operations, an endorsement that runs a few hundred dollars and bumps up business property coverage and liability limits is typically sufficient.
“If your side hustle involves clients on premises, real inventory, or employees, a full-on business owner’s policy, or BOP, which starts at $500 to $1,000 per year, is likely your best,” explains Lemmon.
If your current home insurer doesn’t offer the endorsements or coverage you need at a price you can afford, it’s a good idea to shop around and explore other options.