What is home-based business insurance all about? According to the Small Business Administration, there are over 30 million small businesses in the United States, and about half of them are half-baked. This includes different types of businesses, such as personal trainers, freelance writers, accountants, translators, and many more.
Although starting a home business is an interesting one, there are various risks involved. This is where home-based business insurance comes in. You need the right home business insurance coverage to help protect your business from unforeseen financial disasters.
What is Home-Based Business Insurance?
Home-based business insurance is a type of coverage that protects the business you run from your home. While homeowner’s or renters’ insurance can help with some risks, it may not cover all the specific needs of a home business. Home-based business insurance fills this gap by offering protection for your work equipment, inventory, liability issues, and other risks unique to your business. This way, you can focus on growing your business without worrying about unexpected costs.
Do I need it?
Most owners benefit from having home-based business insurance along with their homeowner’s policy. This is especially important if you frequently receive business deliveries or welcome clients into your home. If someone gets hurt during a business-related visit, you could be responsible for their medical expenses, which aren’t covered by homeowners insurance.
Even if you work from home without meeting customers or colleagues in person, you might need professional liability insurance for your work, which isn’t included in a homeowner’s policy. If you ship products to customers, consider product liability coverage to protect against lawsuits stemming from your business activities.
Types of Businesses That Need Home-Based Business Insurance
While you may think home-based insurance is not for your type of business, Here are a few examples of owners who may need the policies.
- Graphic Designing
- Consultants
- Dog Walking
- Writers
- Web developing
- Online ships
- Food sales
- Accountants
- Tax preparers and more
Home-based business insurance isn’t just a safety net—it’s your business’s silent partner, working in the background to keep your dreams afloat. Investing in the right policy means you can focus on growth and creativity. Knowing you have a trusted shield against unforeseen bumps in the road.
Types of Home-Based Business Insurance Coverage
If you run a home-based business, one of the good ways to get coverage is with the BOP (Business Owners Policy). A BOP bundles important coverage types: commercial property insurance, general liability insurance, and business interruption insurance.
It is much cheaper to purchase a BOP than to buy a policy separately, and you can add various coverage types as you want. Below are some of the common types of small business insurance coverage you can consider.
General liability insurance
This coverage protects your business from accidental injuries and property damage that might occur during your work. For instance, if you run a painting business from home and spill paint on a client’s furniture, this insurance would pay for repairs or replacements. It also covers legal fees, judgments, and settlements if you’re sued because of an accident.
Additionally, general liability insurance safeguards you against other issues like copyright infringement, damage to someone’s reputation, and advertising injuries.
Business interruption insurance
If your business has to shut down because of something like a fire that your insurance covers, this coverage steps in to help. It covers things like money you lose, employee pay, and costs to move to a temporary spot if needed. This type of insurance is also called ‘business income insurance.’
Commercial auto insurance
If you drive your car for your job—like delivering items or meeting clients—you’ll need this coverage. Your regular car insurance won’t protect you in the event of work-related accidents.
Commercial property insurance
Also known as business property insurance, it protects your business assets if they are stolen, lost, or damaged by events covered in your policy, like a fire. This insurance ensures your business property remains safe from unexpected setbacks.
Professional liability insurance
This protects your business from accusations of errors made while doing your work. For instance, if you’re an accountant and a client says you gave them poor advice, this insurance can help cover legal fees, judgments, and settlements.
Workers compensation insurance
If an employee gets hurt or sick because of a work situation, workers’ compensation insurance covers their medical costs. As a sole proprietor, you might not need this insurance, but if you have employees, know your state’s workers’ compensation rules.
The National Federation of Independent Business offers a state-by-state guide to workers’ compensation laws.
Depending on the type of business, you may need other specialized coverage, such as employment practices liability, cyber liability, and commercial umbrella insurance. Meet with your insurer or insurance agent to learn more about the coverage.
How much does it cost?
A BOP costs an average of $57 a month, according to our research. Just like I have mentioned above, it includes business interruption, general liability, and commercial property insurance. The costs of this coverage depend on several factors, such as location, number of employees, types of businesses, the coverage you buy, business property and equipment, and coverage limits and deductibles.
How to purchase Home-Based Business Insurance
Buying home-based business insurance can be a smooth journey when you follow a clear path. Start by identifying the specific risks to your business, such as equipment damage or client visits. Once you know your needs, reach out to insurance providers who offer tailored policies for home-based businesses.
Compare different coverages to find the best fit and price for you. Look for a policy that covers not just your business property and liability but also aspects like loss of income and cyber protection if you operate online. Remember to ask about any endorsements or add-ons that could enhance your coverage. Don’t forget to read the fine print and ask questions about exclusions or limitations.
Lastly, keep your insurance up-to-date by reviewing your policy annually or whenever your business grows. By taking these steps, you can confidently protect your home-based business with the right insurance.