Your business liability is a completely separate entity from the liability that is covered under your homeowners insurance. Like you, I have a personal training studio located in my house. From an insurance perspective, the increase in “foot traffic ” i.e. more people coming to your home due to your business presents a greater liability risk than would be normally expected at a residence. The simple fact that your business, personal training, results in more people coming to your house increases the liability risk for the insurer. If you had a different business, such as a computer repair business, then the risk for the insurer would not as great because the “foot traffic” would be less.The bottom line is, that the increased risk of liability is not related to the type of business,i.e. personal training (the professional and general liability insurance covers that), but rather it is directly related to the increased risk associated with increased “foot traffic”. It is due to this increased risk that State Farm would or did cancel your homeowners insurance. If you are going to continue personal training in your home studio, I would suggest to contact your insurance broker to find an insurance company willing to underwrite a policy to fit your needs. Word of caution, be prepare for a drastic increase in your insurance premium, but don’t risk being uninsured.
When setting up my business, I found a mentor at the small business center of a local community college. Her help was invaluable in determining my business structure, which helped me to decide the best liability insurance for my business purposes. Depending on the laws and policies where you live– state and local laws, town codes and restrictions, etc.–it’s almost an essential to have a mentor to walk through all the aspects of your business formation. I would not have made it this far without a mentor to understand the interrelations of all the decisions I was making, including that about liability insurance. It’s well worth the time and effort.
Operating as an LLC is much safer than as a sole proprietor because your personal finances and business finances are separated legally. You can then operate with business insurance, and personal trainer insurance, but you still need to have waivers drafted by legal experts. Then you MAY be able to find one agency willing to try to give you home insurance with an in-home business.
Really, no one is willing to do it because it’s simply too risky. Think of home many things can happen to a home and how many ways it can come about. Then think of how many things can go wrong with a business. So to try to insure all of those things with essentially one policy, it would be the most expensive policy you’ve ever seen, and probably the most extensive set of documents you’ll ever deal with.
Overall, you’re better off training at other locations (such as public parks) and designating part of your home as an office area. It will allow for all the tax benefits without nearly as much liability, but PT insurance is still necessary.