Home Based Business Insurance Guide
Today’s digital workforce has changed not just the way employees get their work done, but where they get it done. Instead of trekking to the office each day, successful entrepreneurs and small business owners are able to operate their businesses from the comfort of their homes.
But just because you can run your business wearing fuzzy slippers doesn’t mean that you can keep it casual when it comes to your insurance. A home-based business needs to be protected just like any other brick and mortar operation. More importantly, it’s not just a case of whether or not to get insured, but what kind of insurance to get.
If you’re one of the growing number of entrepreneurs running a company from your home, you probably have questions about insurance—and we have the answers. Keep reading as we cover why you need it, and which type of home-based business insurance will best meet your needs.
What Is Home Business Insurance?
Home business insurance is not a specific type of insurance in itself. Instead, it’s a collection of policies that businesses operating out of homes usually need.
Insurance is critical for home-based businesses to have because even though they may operate on a small scale, they face many of the same risks as their larger counterparts. This can include third-party claims, damage to company-owned property, and vehicle accidents. And although homeowner’s or renter’s insurance protects your home, it typically doesn’t typically cover business liabilities or protect your business property—including technology, files, or professional equipment. That’s because most homeowners policies contain business-related exclusions and limitations. For example, many policies exclude structures not attached to a dwelling (like a detached garage or shop building) if they’re used for business purposes. Without the right coverage, your business could be responsible to pay out of pocket for:
- Property damage: If your inventory, equipment, furniture, or files are destroyed in a fire, this type of coverage can help pay for replacement costs.
- Lawsuits: If legal action is being taken against your business, you won’t be on the hook for expensive defense costs
- Injuries: If a client or employee trips and falls in your home, you won’t have to pay for medical and/or legal bills out of pocket.
- Issues related to data loss: If your data is stolen or damaged, you’ll be protected.
Home-based business insurance is coverage tailored to your needs, protecting you from claims arising from third-party liability, property damage, and more.
Do I Need Insurance for a Home Based Business
Considering the number of potential liabilities that any business faces, it’s a wise idea to have at least a combination of a few policies in place, depending on your business needs. And that could be one less thing to keep you up at night—even if it is in your home-office. Still need more convincing? Here are some questions to consider:
- Do customers or clients visit your home?
- Do I keep inventory, products, or supplies in my home or at an off-site job location?
- Would damage to your home interrupt your business?
- Do you have employees working in or outside of my home?
- Do you maintain client or employee records on my computer?
If you answered “yes” to any of the questions above, it’s strongly advised that you review your type of coverage and coverage limits. In this case, home liability insurance might not provide enough protection for your home based business.
Types of Home-Based Business Insurance
A home based businesses can range from a small consulting practice to a larger retail operation. That’s why the type of coverage you need for your home-based business will depend on your business size. It will also depend on your industry. If you need flexible insurance to protect your home based business, here are your options for coverage:
- Business Automobile Coverage: Do you use a vehicle for business purposes? Whether you’re providing services, visiting clients, or making and picking up deliveries, you need business auto insurance to cover the vehicles you use. your personal auto policy won’t cover the business use of the vehicle, so business automobile coverage will provide coverage if you are in an accident.
- General liability insurance: The most common coverage for a home business, liability insurance helps to pay for third-party injuries and damages for which you’re responsible. So if you’ll be having clients or visitors to your home, then liability insurance is a must for protecting your business. After all, your homeowners’ policy won’t protect you from injury claims made from visitors to your home-based business. So if a potential client slips and falls on the way out of a meeting in your home, you’ll need liability insurance—not homeowners insurance—in order to be covered.
- Professional liability insurance—also known as errors and omissions (E&O) insurance: If your client or customer thinks a mistake in your professional services caused a financial loss, they can sue your business. Even if you didn’t do anything wrong, you’ll have to pay expensive legal defense costs out of pocket if you don’t have business coverage. But professional liability insurance protects you against claims of negligence or failure to deliver claims made by your clients or patients, including misrepresentation and inaccurate advice.
- Product Liability Coverage: Does your business make or supply a product? If so, it’s a wise idea to ask your provider about product liability insurance. This type of coverage protects your business for damages to property or a person caused by a product you designed, manufactured or supplied.
- Business Property Insurance: Most likely, you rely on equipment—such as a computer, fax machine, printer, furniture, etc—to run your business from home. However, even though those items are in your home, they won’t typically be covered by your homeowners’ policy in the event of a fire or flood. If you wouldn’t be able to afford replacements, property insurance may be a must to keep your business running smoothly in the event of a disaster.
How Much Does At-Home Businesses Insurance Cost?
When it comes to determining the cost of your premium, an insurer will take a variety of factors into consideration. This includes the type of business you run and how long you’ve owned it, as well as your credit history and where you live. For example, a home-based catering company bakery that has employees will likely pay a different rate than a graphic designer who works from home alone.
In general, however, a home business insurance policy can range from $250 to $1,500 per year, depending on your needs. The majority of home-based business owners find that a business owner’s policy (BOP) is the most cost-effective solution to cover both business assets and liability. BOPs are inclusive policies often starting around $250 annually, and they protect business owners from general liability incidents, business property losses, and business interruption claims. An insurance agent will be able to help you decide which choice is the best for your specific business needs.
See How Much You Can Save on Home Business Insurance
Now that you’re well-equipped to choose the business insurance plan that suits you best, it’s time to find the best possible coverage rates. We’re here to take the stress out of insurance shopping with our fast affordable online business insurance quotes. Get yours right now, and enjoy the peace of mind that your business coverage is comprehensive and affordable.