home based business insurance

Home-Based Business Insurance: What Is It and Do I Need It?

Finding the Protection You Need

If you’re one of the growing group of U.S. citizens operating a business from your home, it’s important to explore home-based business insurance. Your business should be covered by comprehensive policies to protect you, your employees, your customers and your clients.

In this handy guide, we’ll establish what counts as a home-based business and determine what insurance is available to those companies. You’ll find out whether you need to purchase a policy and discover the easiest ways to do this. Let’s dive in.

What Are Home-Based Businesses?

50% of businesses in the U.S. are home-based businesses. These are companies that operate out of an individual’s own home rather than a property specifically purchased or rented for business purposes. Home-based businesses tend to have only one employee, though sometimes a couple will run a home business together or employ a few people to work from their home.

Popular home-based businesses include those selling handmade products, subscription boxes and digital products. It also includes those who teach online. During the Covid-19 pandemic, the number of people baking from home and selling their tasty treats went up substantially.

What is Home-Based Business Insurance?

Every company must have business insurance, including businesses operated from home. Being within the confines of your home blurs the line for a lot of people, which means many forget the value of getting insurance.

Insurance can cover such things as injuries that take place in your home, lawsuits and property damage that happens as a result of your business practices. These policies will help to protect you should something bad happen.

Types of Home-Based Business Insurance

There are at least half a dozen individual policies you can take out in the realm of home-based business insurance. Different providers will offer different coverage, so it’s important to check exactly what you’re being offered. Read on to discover the three most commonly purchased policies.

General Liability Insurance

The most common type of home-based business insurance is general liability insurance. This policy covers legal fees if your business is sued. You may be sued by a client who falls in your home or if there is damage to any of their property while they are in your home for a professional reason. For example, if the tree on your front lawn were to fall and damage their car while they were meeting with you, you’d use your general liability insurance to rectify this.

Professional Liability Insurance

Professional liability insurance covers you in the areas of poor advice or negligence. Being a business owner isn’t a perfect art, and there will be times when you make mistakes. For example, you may provide a client with advice that ends up losing them money. If you are sued for this or the more severe charge of negligence, you’ll be covered by this policy.

Professional liability insurance is especially important for those working in sectors such as accountancy, where giving poor advice is possible. Giving a client poor advice isn’t likely in a graphic design environment, for example, so this policy is less suited to those types of creative industries.

Workers Compensation Insurance

If you employ at least one other individual in your at-home company, you should consider investing in workers’ compensation insurance. Otherwise, it can be very costly if an employee injures themselves. This policy will cover any medical payments you need to make, as well as cover lost wages and expenses associated with their rehabilitation back into the workplace.

Should I Get Home-Based Business Insurance?

If clients visit your home, you employ other people or you have business-specific equipment, you should get home-based business insurance.

While many people don’t think about taking out insurance when operating from home, others falsely believe that their normal home insurance policy covers them. These policies cover your personal assets but not your business ones. And they don’t cover employee costs or risks of negligence in your business.

How To Purchase Home-Based Business Insurance

There are two options when it comes to getting covered for your from-home business practices. Firstly, consider adding business policies to your home insurance. Some firms will offer this capability, meaning you’ll be covered for your home and business by one company. This can make things easier regarding monthly payments and when you need to make a claim.

Alternatively, you could purchase insurance coverage for your at-home business separately. They tend to offer more in-depth and specific coverage than home insurance add-ons, so it’s ideal for those operating in an at-home environment with higher risks.

With a home-based business, you're going to want some extra security. Check out the best home security systems.