Home-Based Business Insurance Policy Information
Home-Based Business Insurance. More and more people are discovering the benefits of owning their own home-based businesses. Many people enjoy small in-home businesses because it allows them to work part time, arranging their schedules around the needs of their children or other jobs.
Other people may decide to go into business full time. No matter the type of business, home-based business insurance is an essential and smart component required for businesses of all sizes. Just because you are home based doesn't mean that someone won't sue you!
Home-based business insurance protects you from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked home-based business insurance questions:
- What Is Home-Based Business Insurance?
- How Much Does Home-Based Business Insurance Cost?
- Why Do Home-Based Businesses Need Insurance?
- What Type Of Insurance Do Home-Based Businesses Need?
- What Does Home-Based Business Insurance Cover & Pay For?
What Is Home-Based Business Insurance?
Home-based business insurance is a type of insurance designed specifically for individuals who run a business from their home. It provides coverage for damages, losses, and liability risks associated with running a business from a home-based location.
This type of insurance may include coverage for property damage, liability, loss of income, and equipment damage. It is important for individuals who run a home-based business to consider purchasing this insurance to protect their business and personal assets.
How Much Does Home-Based Business Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small home-based businesses ranges from $27 to $39 per month based on location, revenue, claims history and more.
Why Do Home-Based Businesses Need Insurance?
Business insurance policies protect small home-based businesses from damage or loss of equipment and merchandise and from the fallout of potential claims of liability against the business.
There are roughly 38 million businesses operated out of people's homes across the United States. Every 12 seconds, a new business starts up, and around 7 out of 10 businesses based out of the home are operations three years down the road.
There is more than $425 billion dollars in revenue generated by U.S. businesses each year. Around 2 out of 10 home businesses take in more than $100K per year.
Business insurance policies protect home-based businesses in from financial loss. Although risks vary widely according to the industry in which you do business, some potentials for loss include:
- Damage to a substantial amount of inventory stored at home. Damage may result from fire or theft, with the potential to cost the business owner a great deal of money.
- Claims against the business for a client's financial loss due to "errors and omissions" on the part of the small business.
- Claims arising from illness or injury as a result of a product your business demonstrates or showcases.
- Claims against the business brought about by damage you or employees do to a client's property.
These are just a few scenarios. There are an unlimited number of ways that businesses may find themselves on the receiving end of a lawsuit or claim, and business insurance provides a buffer for the business to prevent financial ruin.
What Type Of Insurance Do Home-Based Businesses Need?
Just as there are a vast array of home-based businesses, there are a number of different avenues for getting business insurance coverage. Some of the most common are:
- Renters or homeowners policies. The purchase of an addendum on a renters or homeowners policy is often all the coverage a true small home-based business needs. For small businesses that do not have a lot of inventory or equipment that requires coverage, this may be the best route. Oftentimes businesses of this nature can find coverage for just a few dollars a month with a rider on their basic renters or homeowners policy. However, this type of coverage does not afford the business any protection from liabilities, so if the business is one that may face liability claims, this option may not be sufficient for their needs.
- Home business policies. For medium-sized home-based businesses with assets from $2,500 to $10K or for businesses that may face claims for injuries, poor work quality, or property damage, a home-based business insurance policy is an essential purchase. Usually very affordable, this policy provides around $10K in coverage for property and $1 million in coverage for liability claims.
- Commercial insurance policies. A commercial insurance policy is the right policy for large home-based business ventures that require a substantial coverage level for many assets. This type of policy usually offers several options when it comes to liability protection, including negligence and malpractice insurance. It may afford millions of dollars to cover property damage or loss.
What Coverage Does Home-Based Insurance Provide?
Although policies vary and are customizable based on the home based business' needs, most provide for:
- Liability. Liability coverage guards against loss due to liability claims against the home-based business. Liability coverage amounts range from $300K to $1 million.
- Property coverage. Home-based business property coverage shields the business from damage or loss to business equipment and other assets.
- Loss of income coverage. This protection helps the business maintain its finances in the event of a work stoppage. Policies generally provide the money needed to pay employees and handle the business' bills for a year.
- Directors and officers liability coverage. When an officer or director of a company is named in a legal suit, D&O, or directors and officers coverages, protects the company from liability.
What Does Home-Based Business Insurance Cover & Pay For?
Home-based businesses can face a range of lawsuits, similar to any other business. Here are some examples and how insurance can protect them:
Personal Injury or Property Damage: If a client or visitor gets injured on your property, or if you accidentally damage client property during a service call, you could be sued. This is where General Liability Insurance comes in. This insurance covers bodily injury, property damage, and even reputational harm. It can help pay for medical expenses, repair costs, and even your legal defense if a lawsuit occurs.
Professional Mistakes or Negligence: If a customer claims that your work or lack of professional diligence resulted in a financial loss, they may sue. Professional Liability Insurance, also known as Errors and Omissions (E&O) insurance, can help protect you in such instances. It covers you if you're sued for negligence (making a mistake), even if you haven't made one.
Product Liability: If your business sells a product that causes harm to a customer, they could sue for damages. Product Liability Insurance can help cover the legal expenses related to these claims, as well as any settlements or judgments against the business.
Employee Injury: If you have employees who get injured while working, you could be sued for compensation. Workers' Compensation Insurance provides coverage for these situations. It can help cover medical fees and partial lost wages for the injured employee, and it often includes employer's liability insurance, which can help cover legal fees if the employee sues.
Data Breach: If your business handles sensitive customer data, a data breach could result in a lawsuit. Cyber Liability Insurance can help protect against the financial losses related to a data breach or cyberattack. It can help cover the costs of notifying affected customers, public relations efforts to manage your business's reputation, and legal fees associated with the breach.
Non-payment of Rent or Utility Bills: As a home-based business, you might be using a part of your home for work. If you don't pay your rent or utility bills, you could face a lawsuit. A Home-Based Business Insurance policy usually includes business income insurance, which can provide funds to help you meet your financial obligations in case of a covered loss.
It's important to remember that not all insurance policies are created equal, and different businesses have different needs. It's always a good idea to talk with a professional insurance agent or broker to ensure you're adequately protected.
Home-Based Business Insurance - The Bottom Line
Home based businesses face different risks than other commercially based operations. Other types of coverage may be available, dependent on the home based business' needs and operations.
Additional Resources For Small Business Insurance
Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.
- Small Business
- Business General Liability
- Business Interruption
- Business Liability
- Business Owners Policy (BOP)
- Certificate of Insurance
- Commercial Auto
- Commercial Crime
- Commercial Package Policy
- Commercial Property
- Commercial Umbrella
- Comprehensive General Liability
- Cyber Liability
- Directors and Officers Liability
- Employment Practices Liability
- Event Cancellation
- Fiduciary Liability
- General Liability
- Home Based Business
- Independent Contractor
- Liability Insurance Certificate
- Liability Insurance
- Ocean Marine
- Professional Liability
- Specialty Directors And Officers Liability
- Specialty Errors And Omissions
- Specialty Excess
Businesses need commercial insurance to protect their assets, employees, and customers. It helps to cover the costs of potential accidents, lawsuits, and other unforeseen events that can result in financial loss.
For example, if a customer slips and falls on a wet floor in a store, the business could be held liable for their injuries. Commercial insurance can help cover the costs of medical bills and legal fees associated with the incident.
Additionally, businesses often have valuable equipment and inventory that need to be protected from theft or damage. Commercial insurance can provide coverage for these items in the event of a disaster, such as a fire or natural disaster.
Furthermore, businesses often have employees that can be injured on the job. Workers compensation insurance can provide coverage for medical bills and lost wages for injured employees.
Overall, commercial insurance is a necessary tool for businesses to protect their assets, employees, and customers. Without it, businesses could face significant financial loss in the event of an unexpected occurrence.