Home business insurance provides a way to shield your home-based business from potentially huge financial losses due to a natural disaster, a lawsuit, or another covered peril. Experts recommend making this small-business insurance a priority for a home business.
Here’s what you should consider when looking at home business insurance so you can understand how this coverage benefits you and how it differs from a traditional home insurance policy.
Several types of coverage make up the category of home business insurance, including general liability insurance, professional liability insurance, and workers’ compensation insurance.
Here’s a rundown of the kinds of insurance you might want to consider if you run a home business.
General liability coverage protects your business against financial losses triggered by injury, property damage, medical expenses, libel, slander, lawsuit defense, court judgments, or settlement bonds.1 For instance, if a customer breaks their arm while visiting your business, this policy might pay their medical bills.2
Professional liability insurance protects you from financial losses arising from situations such as malpractice, errors, or negligence. For example, this coverage might benefit a massage therapist sued by a client over alleged skin damage.
Property insurance protects your business in the case of damage to commercial property resulting from various events. These events include fire, smoke, hailstorms, windstorms, and vandalism. Property such as business equipment, furniture, and inventory might fall under this coverage umbrella.
Keep in mind that a business owner’s policy combines business property and business liability insurance into one package.
Business interruption insurance, also known as business income insurance, protects against financial losses if a business shuts down due to property damage caused by a disaster. For example, a business might file a business interruption claim if a fire heavily damages the business’ property.
Workers’ compensation insurance covers medical costs and lost wages for employee injuries at work. For example, this coverage might kick in after a worker breaks their wrist by slipping and falling in a home office.
When you shop for home business insurance, you can work with an insurance broker or agent or purchase coverage directly from an insurance company. As you decide which process is best for you, keep these things in mind.
An insurance broker doesn’t work for insurance companies like State Farm or The Hartford. Instead, they work on behalf of their customers to find the right insurance coverage by comparing coverage from a variety of insurance companies.
An insurance agent works on behalf of one or several insurance companies to sell coverage. A captive agent represents just one insurer, while an independent agent represents several insurers.
Rather than using the services of an insurance broker or agent, you can shop for home business insurance on your own and buy it directly from an insurer.
If you shop for home business insurance without help from an insurance broker or agent, you might end up paying more for coverage. Other mistakes that may come up include:
Focusing only on price: Ideally, you should find the coverage that best fits your needs instead of the coverage that turns out to be the cheapest. In some cases, the best coverage might not be the least expensive option.3
Failing to buy enough coverage: You might be tempted to skip coverage, such as professional liability coverage, that should be a must-have for your type of business. Just make sure you don’t ignore coverage that’ll be vital for your business going forward.
Not covering all your property: You might think that omitting a valuable item from your policy saves money on your premium. In the long run, though, omitting that item could be a costly error if it’s damaged or destroyed by an otherwise covered peril.
Making a mistake when filling out your application: When completing an insurance application, pay attention to the details. Leaving out or even lying about information could void your policy or lead to other consequences.
Avoiding the mistakes above can put you on the right path toward getting the right coverage for your business. Follow these five steps when shopping for and purchasing home business insurance.
Some small-business owners depend on home business insurance to help ease financial losses that would damage their home-based business or even force it to shut down. If you still have questions about this coverage type, the following answers should help.
Home business insurance covers a number of circumstances that can harm your business. Without this coverage, you might be fully responsible for costs like legal fees if a customer sues your business or repair bills if a natural disaster hits your property.
Generally, home business insurance offers broader coverage for business assets and business liability than a homeowners policy does.4
Home business policies typically cost between $950 and $1,900 per year. Factors that influence the price of home business insurance include a business’ risks, size, claims history, and coverage limits.
At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.
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