There is a bigger issue of personal liability insurance - which makes home teaching a finanical no-no IMHO. I would always hire a room in a rehersal studio/school etc to teach in. your covered if things blow up - its a public place and is designed for music playing.
I don't really get this. All household insurance policies have public liability cover, and if you ask the insurers to note that you teach music at home, that should be enough. Assuming you don't live in a death trap.
I go to my tutor's home for sax lessons. She's got a perfectly adequate music room where she sees most of her students (she also teaches in a hired room in another town). My band's keyboard player teaches at his own home. I'd have thought this was pretty normal - and less costly for the teachers!
Unless your point is that they should teach where there are other people around to forestall unfounded allegations? But that's not an insurance issue.
Dynamite with a laser beam...