If you run a business from home, you’re in excellent company. Amazon, Apple, and Disney all got started as home-based businesses. More than half of all US businesses are home-based, so you’re not alone if your dining table often doubles as your work desk.
You’re passionate about your business. You know it has potential, so you want to keep it safe. However, your homeowners insurance and other personal policies might not offer enough coverage to protect the business you’re working so hard to build. For example, many homeowners policies cannot cover business-related claims, or they may only cover them up to a limited amount.
Discover what coverage you need with these home-based business insurance facts and FAQs.
Don’t see the answer to your question below? Drop us a line.
Home-Based Business Insurance Vocabulary
If you’re just getting your company off of the ground, you may be new to the realm of business insurance. Here are a few key terms to get you started:
- Sole Proprietor: A sole proprietor is the exclusive owner of the business. They are entitled to all profits, but are also liable for all losses.
- Limit: The total amount of losses your policy will pay. This limit may be expressed per-occurrence (ie: a separate limit for each individual claim) or as an aggregate limit (ie: a total limit for the entire policy).
- Liability: A legally enforceable obligation. For example, if someone is injured on your property while there on business due to negligence on your part, you could be held liable.
- Claim: A demand made by an individual for compensation, under an insurance policy, for loss or damage suffered.
Why Do I Need Business Insurance If I Have Homeowners Insurance?
Because your home is also your office, you face different risks and liabilities than an ordinary homeowner might. For example, if you’re the sole proprietor of your business, you’re responsible for all of the debts your business incurs. This makes business insurance important for a few reasons:
- Most homeowners policies don’t cover business-related claims.
- If a lawsuit gets to be too expensive and you don’t have business insurance, your personal assets could be at risk.
- If you sell a product, your homeowners insurance typically won’t cover you if someone has a problem with a service or item you provided them.
Business insurance policies protect you from things your personal policies can’t.
What Types of Businesses Should Be Insured?
All home-based businesses can benefit from some amount of insurance. If you run a business, you face risk. What risks you face will depend on factors such as the size of your business, or whether or not you have employes.
Whether you’re a realtor, a freelance writer, a graphic designer, or a piano teacher, you’ll need to determine which policies fit your needs best.
What Type Of Insurance Does My Home Business Need?
The type of insurance you need will depend on the business you run. Factors such as the size of your business, or whether you have a work vehicle will impact the type of insurance you’ll need.
- General Liability: General liability insurance is a vital form of coverage. All businesses can typically benefit from general liability insurance.
- This coverage protects you against damages from accidents involving a third-party. For example, say a client visits you in your home office and slips and falls. Your general liability policy has you covered.
- Professional Liability: Professional liability is also known as errors and omissions insurance. This policy goes hand in hand with your general liability policy. It covers you for financial damages stemming from incidents where you’re at fault. Say one of your products causes injury to a customer, or you give someone bad advice. If you have professional liability insurance, you’re covered.
- Workers’ Compensation: A workers’ compensation policy covers you and your employees from financial loss because of an employee injury. Say you hire seasonal help for your cupcake business during the holidays. If your employee is injured on the job, workers’ comp can help pay medical expenses.
Many states have laws in place stating that any businesses with employees need to have workers comp insurance. Make sure you know what the law is where you operate.
- Commercial Auto: If you have a vehicle you use for work purposes, consider a commercial auto policy. This covers your work vehicle, or your personal vehicle if you use it for your business. If you get into an accident while your vehicle is being used for work, your personal policy may not cover the damages.
- Umbrella Coverage: Umbrella insurance functions exactly as the name implies. It’s an umbrella, a catchall. It covers your losses should they exceed the limits of your other policies.
If your business faces a major lawsuit and you don’t have half a million lying around, for example, umbrella insurance can make up for what your other coverage can’t provide.
How Much Does Home-Based Business Insurance Cost?
The great news is, running your business from your home can save you money on your insurance. Because you don’t have the added expenses that come from insuring an asset such as an office or a warehouse, you may pay lower premiums.
For an exact idea of how much your home-based business insurance will cost, get a free quote from one of Citizens General’s business insurance specialists.
When you’re striving to get your business off the ground, accidents can happen. The right home-based business insurance provides you with the security of knowing that a mishap won’t lead to catastrophic financial losses.
It gives you a safety net so that you can continue pushing your business forward.