How should I insure my home-based business?

Since starting your own business, you have seen the benefits of working on your own terms. However, the drawbacks to being a home-based small business owner include navigating the tricky world of home-based business insurance.

Instead of spending valuable time and resources looking for the right coverage, use this guide to find the best way to insure your home-based business.

Why you need separate insurance for your home-based business

Many small businesses take their home office for granted. If you run a home-based business, you’re probably so used to working from your house that you may not even think about needing insurance. But many reasons exist as to why you need to protect yourself with separate insurance for your small business.

For example, someone could break into your home and steal your inventory, supplies, computers, or other equipment that belongs to your company. Without adequate coverage for home-based business equipment and property—and adequate liability insurance—you could be looking at an expensive headache.

Will homeowners insurance cover my business?

If you own a home and run a small business from it, you might think your homeowners insurance policy will cover you. After all, you work out of your house, and your house has insurance. While it seems like your homeowners coverage should include your business possessions, most types of home policies don’t—many have exclusions for home businesses.

Home insurance is best for protecting your personal property. Some homeowners insurance providers include a small amount of protection for business equipment. However, it isn’t much—a typical coverage limit is $2,500 while at home and only $250 when it’s off the premises, according to the Insurance Information Institute.

Plus, homeowners policies typically don’t cover business liabilities. Here’s why that’s important: Suppose you run a home inspection business or home food service, and a client sprains their ankle or suffers another injury while visiting your home. If you're held responsible for the damage, a home-based business insurance policy can protect you and your business assets.

What a home-based business insurance policy covers

It’s important to understand exactly what your home-based business insurance policy covers before you buy. Keep in mind you may need different protections based on your line of work. For example, insurance for non-medical home care businesses will differ from a home auto business insurance policy.

What your insurance covers depends on the type of policy you buy. Generally, home-based business insurance can include coverage for property damage protection, liability coverage, and equipment breakdown coverage.

Most companies offer several different insurance packages. That way, you can choose options that fit your budget and best suit your business needs. You typically have three options to get coverage for your in-home business:

• Homeowners policy endorsement
• In-home business insurance policy
• Business Owner’s Policy (BOP)

Homeowners policy endorsement

Depending on your industry and homeowners insurance company, your insurance needs may not require a separate business insurance policy. Some insurers offer a home business insurance coverage endorsement. It can extend your protection to include business property coverage and often costs less than a separate policy.

In-home business insurance

A homeowners policy endorsement may not be enough. In that case, look into an in-home business insurance policy. Some insurance providers offer specific policies for home business purposes. They typically have similar features as larger commercial policies but with lower policy limits and a smaller price tag.

Business Owner’s Policy

A full-blown Business Owner’s Policy (BOP) might seem like insurance overload. But it might be your best bet—even for a home-based business. A BOP for a small, home-based business can protect you from many kinds of liability and property damage.

It bundles general liability insurance (so you’re protected from a lawsuit), business property insurance (so your building and business possessions are covered), and business interruption (so a temporary shutdown doesn’t derail your business).

Insurance coverages you’ll need for your home business

The insurance you need for your in-home business can vary—different types of insurance coverages exist for different types of businesses. Whether you need insurance for a home healthcare business, home watch business, or another small business, you’ll want to consider:

• General liability insurance: For property damage, bodily injury, or advertising injury claims
• Business property insurance: Protects items your business owns
• Business interruption insurance: Financial support for business income if you’re temporarily shut down
• Professional liability insurance: Sometimes called errors and omissions insurance. Protects you if you make a mistake that harms a client
• Hired and non-owned auto policy: Covers personal autos your business doesn’t own when used for business-related activities
• Spoilage coverage: Pays a benefit if your food or beverages go bad because of a power outage
• Equipment breakdown insurance: Pays to repair or replace equipment for business use
• Workers’ compensation insurance: Covers work-related illness and injuries for your employees

Your insurance provider may have additional coverage options to increase (or decrease) your protection. For instance, if you hire employees, you may need workers’ comp insurance. But if you don’t work directly with the public, you likely won’t need commercial general liability coverage.

How much does home-based business insurance cost?

There’s no cut-and-dry answer to how much you’ll pay for home-based business insurance. A variety of factors determine the cost, but some of the most important are your location and industry.

For example, if you own an in-home hair salon, you’ll likely be required to carry more insurance than someone who works at home as an administrative assistant. Similarly, certain industries (like jewelry making) are inherently riskier than others (like writing), which will impact your premium.

Generally, most in-home businesses pay less than $250 per year, while 35% pay between $250 and $500 per year. Here’s a look at how much you might pay:

• Virtual assistant insurance: $495
• DJ insurance: $450
• Cake and cookie baker insurance: $290
• Writers and author insurance: $287
• Crafters and artisan insurance: $202
• Event and wedding planner insurance: $182

You’ll usually pay lower premiums if you opt for a basic home-based business insurance plan compared to more comprehensive coverage. But you’ll likely get less coverage, too. It helps to get a policy from a reputable small business insurance company or insurance agent—then you’ll know you have the right protection.

Get a home-based business insurance quote now

Having a home-based business is a big responsibility—which is why you’ll need to have adequate home-based business insurance. There are many types of coverage that your business may require. But Huckleberry is here to help.

We’ll help you discover how much home-based business you need and set you up with the right policy. Get a home-based business insurance quote today!