Insurance for Home-Based Businesses
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Home-Based Business Insurance

Owning a home-based business has a lot of perks. You call the shots on dress code, you don't have to fight traffic to get to the office, and your overhead is lower. This might explain why US Census Bureau data (as reported by Forbes) shows of the 28 million small businesses in this country, about 52 percent of them are home-based.

Plus, the gig economy keeps growing. Nearly 54 million people in the United States perform freelance work, according to a report [PDF] from the Freelancers Union. Most of them probably work from home, too.

But ripe conditions for home-business ownership don't mean this venture is risk-free. Like any traditional business, home-based businesses can be sued or lose property unexpectedly. Let's see how small business insurance can protect what you've built.

Why Home-Based Business Insurance Matters

First, don't rely on your homeowner's or renter's insurance to cover your business liability or property. Typically, those personal policies specifically exclude business coverage. That usually means you won't have protection for client injuries that happen at your home or damage to your…

  • Computers and printers.
  • Office furniture.
  • Inventory.

You generally need home office insurance to address these incidents.

Insuring your business is easy and can be pretty affordable, especially when you work with Insureon. We help home-based business owners of all walks find appropriate coverage, including…

Let's look at some common home business insurance policies you may need.

General Liability Insurance / Business Owner's Policy

General Liability Insurance is one of the most versatile home-based business insurance policies. It helps pay for legal expenses when you're responsible for:

  • Third-party bodily injuries that happen in your home.
  • Bodily injuries caused by products you sell.
  • Libel, slander, copyright infringement, and more.

For example, say a delivery person slips and falls on your icy sidewalk while delivering your new office furniture. Your General Liability policy may pay for their medical expenses or cover legal expenses if you're sued.

Typically, home-based business owners pay about $425 per year for this protection – that's around $35 per month.

A Business Owner's Policy is another popular, affordable choice for home-based business owners. This combines General Liability Insurance and Commercial Property Insurance, which can pay to replace damaged or stolen business property.

Errors & Omissions Insurance

Angry customers might sue you if they think you didn't do a good job. Errors & Omissions Insurance (aka Professional Liability Insurance) can help pay for your legal expenses when a client sues over:

  • A professional oversight or mistake.
  • Undelivered work that was promised.
  • Missed deadlines.

This way, if an angry bride sues a party planner because her big day didn't match up with her expectations, Errors & Omissions Insurance may cover the planner's legal costs.

The average home-based business owner pays about $650 annually for an E&O policy, which is $54 a month. When you compare that to the cost of a lawsuit (which includes attorney fees, court administrative costs, settlements, or judgments), it seems like a bargain.

Commercial Auto Insurance

A Commercial Auto Insurance policy can come in handy if you use your car for business purposes. Let's say you're a cosmetics salesperson. You often drive your personal car to makeup parties or to make order deliveries. But your personal auto policy may not cover accidents that happen during these business errands.

You'll often need Commercial Auto Insurance to cover business driving. When you get in an accident during a business trip, it may pay for repairs to a third-party's vehicle or their medical bills if the other driver is injured.

Commercial Auto Insurance is also important if you are one of the thousands of rideshare drivers for companies like Uber or Lyft. Again, your personal auto policy probably won't cover your commercial activities – like driving strangers around for money. So if you get into an accident while driving for a rideshare company, you will probably be on the hook for the damages. Not only that, if your insurer finds out about your side hustle after the fact, it may cancel your policy.

Many commercial insurance companies don't offer coverage for ridesharing yet. At this point, Insureon doesn't work with insurance carriers that provide Commercial Auto Insurance for rideshare drivers. However, this may change in the future as ridesharing grows in popularity, so please check back.

Liability Insurance for Short-Term Home Rentals

 

If you rent out your home on a site like Airbnb, be aware that counts as business activity. In other words, your homeowner's insurance may not cover accidents or property damage associated with the guests you host for a fee.

But Insureon can help you fill the gap in your homeowner's coverage. We offer different liability policies designed to cover short-term home rental risk. Give us a call if you'd like to learn more about your short-term home rental coverage options.

Further Reading for Home-Based Business Owners