Safely Self-Employed: Do I Need Home Based Business Insurance?

Over 16 million people are currently self-employed. Many entrepreneurs run their businesses from home, and this trend is only expected to continue.

Some self-employed individuals avoid purchasing insurance. They often think it’s too expensive or that it’s not required. And while a home-based business is an exciting endeavor, there are risks involved. It’s important to protect your business from the unexpected.

Here’s why you should consider home-based business insurance.

What Is Home-Based Business Insurance?

When you run a business out of your home, home-based business insurance protects you from property damage, lawsuits, customer or client injury, or employee injury.

Some self-employed professionals rely on their homeowner’s policy, which may not cover some situations. Business insurance is essential. Without it, you could be left paying for damages related to a claim or lawsuit against your business.

Do You Need Home-Based Business Insurance?

If you’re a home-based business professional, you may wonder if you should purchase home-based business insurance. There are a few essential questions to help you make this decision.

• Do clients or customers come to my home?
• Do I have inventory, equipment, or supplies stored at home or off-site?
• Do I keep employee or client records on my computer?
• Would I be in financial danger if I had to close my business due to damage?
• Do I have employees working at my home?
• Do I use a vehicle for business operations?

If the answer is yes to any of the above, you should review your current insurance coverage. Your homeowner’s coverage or general liability may not be sufficient for your home-based business.

Without the proper coverage, you could be left paying out of pocket for:

• Property damage
• Employee injuries
• Customer or client injuries
• Lawsuits
• Technology issues
• Data loss

Businesses That Benefit From Home-Based Business Insurance Coverage

Many home business owners don’t fully understand the risks involved in running a business. Here are a few examples of businesses that could benefit from a home-based business insurance policy.

• Photographers
• Accountants
• Web design
• Hair stylists
• Online product sales
• Caterers or food sales

Buying Home-Based Business Insurance

It’s a good idea to speak with an insurance professional about the best types of insurance for your home-based business. In some cases, you may only need an endorsement added to your homeowner’s policy.

Larger home-based businesses may need the specialized coverage a stand-alone business insurance policy can provide.

Adding an Endorsement to Your Homeowner’s Insurance

Many insurance companies offer endorsements that can be added to a homeowners policy to get additional business-related coverage.

This is a good idea for some small home-based business owners who want to buy a specific endorsement based on their business needs. Speak to an insurance professional about the options for your business.

Purchasing a Standalone Home Based Business Insurance Policy

A standalone policy may offer more comprehensive coverage and higher coverage limits if you operate an established home-based business. This may be a better option for you if you have a large property or a robust business.

Types of Home-Based Business Coverage

As a home-based business owner, you may want to explore whether a business owner’s policy (BOP) is right for your needs. A BOP bundles three types of insurance coverage: General liability, business interruption, and commercial property insurance.

It’s often cheaper to purchase a BOP than to buy separate policies. You can add additional coverage as needed.

Some common types of business insurance include:

General Liability Insurance

General liability insurance covers accidental injuries and property damage that your business operations cause to someone. It covers judgment, settlements, and legal fees if a client or customer sues you over an accident on your business property.

This type of insurance covers other issues, including advertising injury, reputational harm, and copyright infringement.

Commercial Property Insurance

Commercial property insurance protects you financially if your business property is damaged, lost, or stolen. This could be due to a fire or other cause covered by your policy.

This type of insurance is also known as “business property insurance.”

Business Interruption Insurance

If you must close your business due to a problem your policy covers, business interruption insurance covers losses such as income, payroll, or relocation costs. This type of insurance is also called “business income insurance.”

Commercial Auto Insurance

You may need commercial auto insurance if you use a vehicle for business operations, such as meeting clients, driving clients, or delivering products. Your car insurance probably doesn’t cover business-related accidents.

Professional Liability Insurance

Professional liability insurance protects your business from claims of mistakes you might make running your business. For example, if you’re an accountant and a client claims you offered bad advice, professional liability insurance can cover the legal expenses related to their claim.

This type of insurance is also called “errors and omissions insurance.”

Workers Compensation Insurance

Workers’ compensation pays their medical bills if an employee is injured or gets sick in a work-related incident. You may be exempt from certain workers comp requirements if you’re a sole proprietor.

Talk to an insurance agent to ensure you have the proper insurance coverage for your home-based business.

Other home-based business insurance options include

• Cyber liability insurance
• Commercial umbrella insurance
• Employment practices liability insurance

How Much Does Business Insurance Cost?

The typical Business owner’s policy (BOP) costs about $57 per month. This includes general liability, business interruption, and commercial property insurance. Insurance coverage costs can vary and depend on a variety of factors, including:

• The type of business you run
• The coverage you buy
• Business property and equipment
• Number of employees
• Your location
• Coverage limits and Deductibles

Get the Home Based Business Insurance You Need

Many business owners run their businesses from home. This can be a cost-effective way to run a small business, but it’s crucial to have home-based business insurance when the unexpected happens.

You risk your business and finances if you run a home-based business without proper insurance coverage.

Since 1922, McMahon Insurance Agency has provided policies to protect your families, homes, and businesses throughout NJ, PA, and DE. We’ve helped thousands of valuable clients with their insurance needs and would love to assist you.