In the era of remote work and digital entrepreneurship, many people are using their homes as business hubs. While home-based businesses are captivating as they save cost and offer flexibility, there are specific risks associated with this that a standard home insurance policy will or might not cover. Here is where home-based business insurance enters.
It acts as a safety net for people running their businesses in their place of residence. Whether you are a consultant, freelance graphic designer, or an e-commerce entrepreneur, getting a suitable insurance policy with the right coverage can offer financial protection and make sure that your business runs smoothly without interruptions no matter what might come up.
What is Home-Based Business Insurance?
Home-based business insurance is a specially designed type of insurance that offers coverage and protection to handle the risks associated with running a business from your home or place of residence.
Unlike standard renters or homeowners insurance policies that do not usually cover business-based liabilities or losses, home-based business insurance offers such protection for the needs of every remote business owner working in their homes.
Moreover, this form of insurance quote is customized specifically to offer coverage for possible associated risks of business activities carried out in a home environment, making sure that incomes, business assets, and liabilities are protected.
How Does It Work?
The concept behind home-based business insurance is very easy to understand. This form of insurance operates by providing protection and coverage for business-associated risks that are not typically added to or covered by a standard homeowners or renters insurance policy.
For instance, damage to business equipment, business interruption losses, and liability for client injuries on your property are what a home-based business insurance quote generally covers. What’s more, it also works by offering both property and liability protection customized to meet the needs of every home-based business owner and making sure they are protected financially in case of unpredictable legal claims or events.
What Does Home-Based Business Insurance Cover?
Although what a home-based business insurance policy covers depends on the insurance company, here is a general list of events usually covered by this form of insurance:
- Business interruption.
- Property damage.
- Data breach coverage.
- Liability coverage.
- Legal costs and expenses.
- Professional liability coverage.
What Are Its Exclusions?
Even though a wide range of business-related perils are covered by home-based business insurance, there are also specific exclusions. In other words, neither your insurance company nor your policy will be responsible.
- General wear and tear.
- Personal liability.
- Specific natural disasters.
- Employee injuries.
- Intentional damage or loss.
Who Needs a Policy?
A home-based business policy can be beneficial for different professions to make sure that they have sufficient coverage, simplicity of operations, and legal compliance. Here is a short list of professions in the home-based business field that should consider purchasing a home-based business quote:
- Graphic designers.
- Online retailers.
- Freelance writers.
- Virtual assistants.
- Consultants.
- Photographers.
- Web developers.
- IT support specialists.
- Educators and tutors.
- Social media managers.
- Health and wellness coaches.
- Therapists and coaches.
- Event planners.
- Home-based entrepreneurs.
Each of these remote professions has special requirements and risks, so customizing a policy will help reduce the possible issues.
Types of Home-Based Business Insurance Coverage to Consider
As a person running or operating a home-based business, a business owner’s policy, also known as BOP, is one of the best ways to enjoy coverage. Furthermore, this policy type is a combination of 3 coverage types, namely, business interruption insurance, general liability insurance, and commercial property insurance.
Nevertheless, here are the predominant types of small business insurance:
- General Liability Insurance
Covers property damage and accidental injuries by your business operation to others.
- Business Interruption Insurance
Offers coverage for loss of income as a result of business disagreements.
- Commercial Property Insurance
Covers business properties if damaged, stolen, or lost by a covered event or problem by your insurance policy.
- Workers’ Compensation Insurance
Suitable for business owners with employees, covering work-associated illnesses and injuries.
- Professional Liability Insurance
Offers protection against claims of professional negligence or mistakes.
- Commercial Auto Insurance
This type of insurance offers protection to your car or vehicle you use for business or commercial use. For example, if you are working a job that requires delivery.
Other Home-Based Business Insurance to Consider
Here are some home-based insurance policies that you can consider or add to your policy as an endorsement, depending on your business type:
- Cyber Liability Insurance
Offers protection against cyberattacks and data breaches.
- Commercial umbrella insurance
This form of insurance provides coverage if your business insurance liability limit has been reached.
- Employment practices liability insurance
Employment practices liability insurance covers the settlements of a claim against you by your employee or employees. Legal defense costs are also covered.
How Much Does It Cost?
According to Insureon, the average cost of a business owner’s policy is $57 per month. Therefore, business interruption insurance, commercial property insurance, and general liability insurance are included. Meanwhile, the cost of a home-based insurance policy is affected by different factors. They include:
- Coverage type.
- Business type.
- Coverage limits.
- Number of employees.
- Insurance company or provider.
- Deductibles.
- Business property and equipment.
- Location.
How to Buy Home-Based Business Insurance
A series of steps are required to buy a home-based business policy from any company. Besides, there are multiple insurers to check out, as they are considered the best home-based business insurance companies according to reviews and ratings.
However, in this section, we will be learning about the steps required to get a policy for your home-based business. So, here is what you need to do:
- Assess your business needs.
- Prepare the necessary information.
- Research potential insurance companies.
- Gather and compare quotes.
- Seek professional advice from an insurance agent.
- Review the policy terms.
- Select the best policy option.
- Purchase.
- Regularly review and maintain your insurance coverage.
With help from these steps, you can get the right appropriate home-based business insurance to protect you and your business.
Do I Need Home-Based Business Insurance?
Before considering or purchasing a home-based business insurance quote, it is advised by the Insurance Information Institute to ask yourself these simple questions:
- What is my home-based business?
- Does my business need a vehicle?
- What are the unique risks my business may face?
- Does my company have technology that keeps the financial or personal details of clients?
- How many employees do I have?
- Do clients come to my property to carry out business transactions?
You can also have a business insurance agent to help you assess and resolve these questions to find out where your business might be weak and where this form of coverage will help.