Home-Based Business Insurance: A Complete Guide (2024)
There are several ways to buy home-based business insurance, which helps protect your business from financial disaster. If you own a small business, you can add a business rider to your current home insurance policy, which will cost around $8 per month. Larger businesses may need a stand-alone home-based business policy which averages $21 to $34 per month.
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Schimri Yoyo
Licensed Agent & Financial Advisor
Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states and over 20 years of experience. During his career, he has held roles at Foresters Financial, Strayer University, Minnesota Life, Securian Financial Services, Delaware Valley Advisors, Bridgemark Wealth Management, and Fidelity. Schimri is an educator eager to assist individuals and families in ...
Licensed Agent & Financial Advisor
UPDATED: Mar 11, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: Mar 11, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
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Welcome to our comprehensive guide home-based business insurance. As the popularity of home-based businesses continues to rise, it’s crucial to protect your venture with the right insurance coverage.
In this article, we’ll delve into the key topics related to insurance for home-based businesses, including the importance of coverage tailored to your unique needs, the types of insurance policies available, and the specific risks you may face. We’ll also provide valuable insights on how to select the best insurance providers and factors to consider when comparing rates.
Don’t leave the future of your business to chance – take proactive steps today. Enter your zip code below and compare rates from the top insurance providers, ensuring your home-based business is adequately protected.
Options for Home-Based Business Insurance
There are several ways to give your home-based business more insurance coverage. However, the type of business and the number of employees will impact your home-based business quotes.
Add a Rider
If you own a small business, adding a rider to your current home policy that extends your coverage is possible. This rider is used to address business equipment and limited inventory.
In general, you’re a good candidate for a rider if you have less than $5,000 worth of business property. This inexpensive way to extend insurance coverage is a good option for remote workers. However, not every insurance company allows a rider on a homeowners policy.
Buy a Home-Based Business Insurance Policy
It’s also possible to buy an insurance policy written for home-based businesses. This commercial insurance policy addresses the liabilities of working out of your home and covers more than a rider would.
You can choose up to $1,000,000 in general liability to cover operations that take place either at or away from your home. It also covers your personal property used for the business, whether on or off your premises.
To qualify for this coverage, your home has to be the primary place of business operations. You can sell goods or perform services away from home, but your residence must be the central operating location.
You’re also limited in how many employees you can have under this policy. Most home-based business insurance policies limit you to three employees.
Use a Business Owners Policy (BOP)
When you need more coverage than available through a home-based policy, the next step is a business owners policy. It provides property, general liability, and business interruption coverage, and it’s more affordable to combine these coverages with a BOP.
There are other distinct advantages to having a BOP over adding a rider or using a home-based insurance policy, including:
- Data breach liability protection
- Higher business property limits
- Protection from liability for injuries to third-party individuals on your property
However, BOP will have more expensive rates. It is in your best interest to compare multiple types of home-based business insurance quotes, including the best business insurance for home-based businesses, to find the most affordable price for your policy.
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How much does home-based business insurance cost?
Simply adding a business rider will often cost you less than $100 a year. However, a home-based business policy rates typically average between $250 and $400 a year, while a BOP averages between $600 and $1,200 annually.
The base cost depends on how much protection you need, where you live, and the nature of your business. Taking out professional liability costs about $750 a year, though your insurance rates will be higher if you have a risky profession.
Additional policies will cost you extra. For example, commercial auto insurance rates average between $1,000 and $3,000 per year, while adding a commercial vehicle to a personal policy could add a few hundred dollars to your costs each year.
Adding commercial umbrella coverage with a $1,000,000 limit can cost as low as $200 a year, with the cost increasing as you increase the liability limit. Purchasing workers’ compensation depends on the industry and size as well as the state where your business operates.
Other Policy Options for a Home-Based Business
Running a home-based business has many of the same risks as a commercial venture. For example, a lawsuit could cost you thousands, wiping out profits and your personal savings. You may consider additional policies to complement your home-based business coverage.
Errors and Omissions Insurance
Also known as professional liability insurance, this coverage is necessary for professional occupations, such as life coaches, lawyers, and massage therapists. When providing professional services or advice, there’s the potential for mistakes to happen.
Read more: Best Business Insurance for Lawyers
Though unintentional, the resulting damages from an unhappy client aren`t covered by a general liability policy. Errors and omissions provide the financial support for a legal defense if you`re sued because of a mistake you made. It can also cover a settlement up to a specified amount.
Read more: Best Business Insurance for Life Coaches
Commercial Auto Insurance
If your home-based business requires you to use your personal vehicle, you should think about commercial auto insurance.
If you’re traveling to a client’s office or delivering your products, an accident isn`t covered through personal auto insurance. A commercial auto policy may also extend coverage if there are employees who drive your car. The liability amounts are higher and more inclusive.
Workers’ Compensation
Federal and state law requires certain employers to carry workers’ compensation coverage for their employees. This gives financial help to employees who experience injuries or illness while on the job.
Commercial Umbrella Policy
You can extend the coverage of both your auto insurance and general liability policies with a commercial umbrella policy. This policy provides financial protection beyond the liability limits of traditional commercial policies, starting at $1,000,000.
Limits of a Renters or Homeowners Policy
A homeowners policy has exclusions for common business liabilities. A homeowners or renters policy limits are also lower than what’s needed to cover your business equipment.
There’s usually a $2,500 limit on business equipment while it remains in the home and a $250 limit for damage or theft that occurs off of your property. Given the cost of a laptop or printer, your standard coverage may not replace these items.
Read more: Best Renters Insurance: A Complete Guide
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What You Need to Know About Home-Based Business Insurance
You can contact your existing insurance company to find out about adding a rider to a homeowners or renters policy. You can also ask about home-based insurance options.
You might need to look for commercial coverage with a company specializing in commercial insurance policies, especially if you’re looking for workers’ compensation coverage. Requesting home-based business insurance quotes will get you the best rates for your coverage.
Frequently Asked Questions
Do I need insurance for my home-based business?
Yes, you need insurance for your home-based business. Your homeowners’ insurance policy may not provide enough coverage for your business operations, and a separate business insurance policy can help protect your assets.
What types of insurance should I consider for my home-based business?
There are several types of insurance to consider for your home-based business, including general liability insurance, professional liability insurance, business property insurance, and business interruption insurance.
What does general liability insurance cover?
General liability insurance can cover legal fees and damages if someone is injured on your property or if you cause damage to someone else’s property. It can also provide coverage for advertising injuries, such as copyright infringement..
What does professional liability insurance cover?
Professional liability insurance can cover legal fees and damages if you are sued for negligence, errors, or omissions in your professional services or advice.
What does business property insurance cover?
Business property insurance can cover damage or loss of your business equipment, inventory, and other property. It can also provide coverage for damage or loss of customer property that is in your care.
How much insurance coverage do I need for my home-based business?
The amount of insurance coverage you need for your home-based business will depend on several factors, such as the size of your business, the value of your assets, and the type of business you operate. It’s best to speak with an insurance agent to determine the appropriate level of coverage.
What does business interruption insurance cover?
Business interruption insurance can cover lost income and expenses if your business is forced to temporarily shut down due to a covered event, such as a natural disaster or theft.
Compare The Best Insurance Quotes In The Country
Compare quotes from the top insurance companies and save!
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Schimri Yoyo
Licensed Agent & Financial Advisor
Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states and over 20 years of experience. During his career, he has held roles at Foresters Financial, Strayer University, Minnesota Life, Securian Financial Services, Delaware Valley Advisors, Bridgemark Wealth Management, and Fidelity. Schimri is an educator eager to assist individuals and families in ...
Licensed Agent & Financial Advisor
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.