Home-based business insurance costs

Home-based businesses pay an average of $42 per month for general liability insurance. Annual premiums range from around $250 to over $1,750 per year.

A general liability policy provides financial protection against third-party bodily injuries and property damage. It also covers lawsuits related to copyright infringement, defamation, and other advertising injuries.

The cost of general liability coverage primarily depends on how much your business interacts with clients, customers, and the general public. For instance, a writer or software developer who works from home faces lower risks than a landscaper or handyman business.

Your business size, amount of foot traffic, claims history, and the classification code that insurers use to reflect your level of risk will also affect your rate.

Insureon’s licensed agents recommend a business owner's policy over a standalone general liability policy for its increased coverage and affordability.

Most home-based companies choose general liability coverage with policy limits of $1 million per occurrence and $2 million aggregate, but some business owners choose higher or lower limits. In many cases, you'll need higher limits to comply with the terms of contracts or state regulations.

Choosing lower limits is an easy way to save money on your policy, but you'll want sufficient coverage limits to pay for a claim. General liability lawsuits can get expensive, especially if your business ends up responsible for a customer's medical bills or a legal battle resulting in a costly settlement or judgment.

Home businesses pay an average of $49 per month for professional liability insurance, also called errors and omissions insurance (E&O) or malpractice insurance. Annual premiums range from around $270 to over $2,600 per year.

A professional liability policy pays for legal costs if a client sues your business over a mistake, oversight, or other act of professional negligence. Businesses that offer professional services or advice are especially prone to these types of lawsuits.

The cost of professional liability coverage depends on the risk of your business causing financial harm to a client. For example, architects, engineers, and software as a service (Saas) companies can expect to pay more for this coverage.

Premiums are generally lower for consultants, tax preparers, event planners, and similar low-risk professions. They can often add this coverage to their general liability policy or BOP at a lower cost than buying the policies separately.

As with other business liability policies, the amount of protection you get depends on the limits you choose. Most home-based companies choose professional liability insurance policies with limits of $1 million per occurrence and $1 million aggregate.

For some professionals, such as real estate agents, doctors, and insurance agents, state laws may require you to have a specific amount of E&O coverage. Other times, it might be required by your clients or the terms of a contract.

Keep in mind, it's important to maintain continuous coverage, as professional liability is a claims-made policy that must be kept active to file a claim.

You can save money on professional liability insurance by choosing lower limits or a higher deductible, but make sure your policy can handle a potential lawsuit.

The average premium for workers’ compensation insurance is $48 per month for home-based businesses, with an annual range of around $220 to over $3,000 per year. Workers' compensation covers medical expenses from work-related injuries, and it also provides disability benefits to injured employees.

State laws usually require workers' compensation as soon as you hire your first employee. It's sometimes required for roofers and other contractors in high-risk professions even when they work alone.

It's a good idea to buy workers' comp even when it's not required, given the high cost of medical care. Health insurance plans can deny claims for injuries related to your job, which is why sole proprietors should consider investing in this coverage.

The cost of workers' compensation depends on the number of employees and the risks they are exposed to in their work. For example, an IT consultant can expect to pay less for workers' comp than a business that relies on physical labor, such as a lawn care company.

When calculating workers' comp premiums, your insurance company will look at your industry, your location, and other factors specific to your business. You can save money by focusing on workplace safety, as a clean history of claims will help keep your premium low.

Some home businesses can fulfill contractual requirements for workers' comp with an inexpensive ghost policy. However, ghost policies aren't permitted in all areas, and they offer no protection in the event of an injury.

Home-based businesses pay an average of $58 per month for a business owner’s policy, or BOP. Annual premiums range from around $300 to over $2,900 per year.

A BOP bundles general liability insurance with commercial property insurance at a lower rate than if the policies were purchased separately. It covers your commercial space and everything inside it, such as computers, inventory, and equipment.

Businesses that own or rent a commercial space typically need a BOP. Many home-based businesses invest in business personal property (BPP) coverage instead, which provides coverage for business property kept at your home or other designated location.

Keep in mind, you can't depend on homeowner's insurance for protection. Your homeowner's policy won't cover business-related liabilities, business property damage, or other losses related to your work.

Offering both boosted coverage and savings, a BOP is the preferred policy for comprehensive coverage. You can add endorsements like business interruption insurance to protect against loss of income and other risks.

Higher limits on a BOP cost more, but provide greater financial protection in the event of an accident or lawsuit. You'll want sufficient coverage for a potential customer lawsuit, along with enough coverage to pay for a fire or other property claim.

You can save money on your business owner's policy by choosing lower limits or a higher deductible. And for property insurance, some insurers offer lower rates to businesses that have security alarms, sprinkler systems, and similar safeguards.

Home-based businesses pay an average of $64 per month for cyber insurance, also called cyber liability insurance or cybersecurity insurance. Annual premiums range from around $250 to over $2,600 per year.

Cyber insurance helps businesses recover financially after a cyberattack or data breach. A cyber insurance policy helps pay for data breach investigations, cyber extortion payments, and costs related to complying with your state's data breach laws.

Every industry can benefit from cyber coverage, from tech and finance to social workers who access client data. This coverage is especially vital for home offices that handle personal information, such as customer credit card numbers, Social Security numbers, or email addresses.

The cost of cyber insurance and the amount of coverage you need depends on the amount of sensitive information you handle, along with your cybersecurity controls and your claims history. A home business policy will cost less than cyber insurance for a large company.

Home businesses pay an average of $191 per month for commercial auto insurance. Annual premiums range from around $370 to over $8,080 per year.

Commercial auto insurance covers injuries and property damage caused by your business vehicle. It can also pay for vehicle theft, weather damage, and vandalism, depending on the options you choose.

Businesses with company-owned vehicles typically must purchase commercial auto insurance. For personal, leased, or rented vehicles used for business purposes, you would need hired and non-owned auto insurance (HNOA) instead.

Business coverage is important since your personal auto insurer could deny a claim for accidents involving business use. Additionally, state laws require you to carry a minimum amount of auto liability insurance for any vehicle.

The cost of commercial auto insurance depends on the type and number of company vehicles, how often they are driven, the driving history of anyone permitted to use them, and the coverage options you choose.

A home business that owns one vehicle will pay less for commercial auto insurance than a company with a fleet of vehicles, for example.