Across America, millions of people are enjoying the earning potential that can come from having a home-based business. For some, this form of income is ideal because it provides the flexibility to work part-time around family needs and schedules. For others, a home-based business is a full-time venture. Whatever your type of business, you may benefit from having a home-based business insurance policy to protect it.
Home-Based Business Quick Facts
- Americans currently run approximately 38 million home-based businesses
- Statistically speaking, a new in-home business starts up every 12 seconds in this country
- About 70% of all home-based businesses are still operating 3 years after inception
- U.S. home-based businesses generate more than $425 billion each year
- Approximately 20% of all home-based businesses earn more than $100,000 a year
What Are My Options for Home Business Insurance Coverage?
A business insurance policy can protect you from potential liability claims and from loss or damage to your merchandise and equipment. There are a wide variety of different kinds of home-based businesses as well as different ways of attaining this coverage. Your main options include:
- Your homeowners or renters insurance policy: For some smaller home-businesses, simply purchasing an addendum to your home or renters insurance policy will meet your coverage needs. This is ideal for home businesses that do not have a lot of expensive merchandise or equipment to insure. For less than $10 a month, you can receive about $2,500 worth of additional personal property coverage for your business equipment. This sort of coverage does not protect you from liability, however, so if your business faces the potential of a liability lawsuit, you may want to see out one of the options below.
- A home business policy: These policies are ideal for medium-sized businesses that have assets between $2,500 and $10,000 as well as those that face the potential for a lawsuit due to injuries, property damage or poor work quality. This type of policy generally costs about $20 to $30 month, can provide up to $10,000 in property coverage and $1 million in liability coverage.
- A commercial insurance policy: This sort of policy is meant for larger home-based businesses that have many assets and require a vast amount of coverage. Policies will generally offer several types of liability coverage, including malpractice and negligence in provision insurance. Commercial insurance can provide millions of dollars in property coverage. You can expect a policy of this type for a home business to cost between $50 and $100 a month.
Most home-based businesses can be fully covered with one of these coverage options.
Why Would I Need Home Business Insurance Coverage?
There are a number of circumstances where a home-business insurance policy can save you from financial loss. Risks vary by industry, but consider the following scenarios:
- If you keep a large amount of inventory in your home and it is damaged in a fire or stolen during a burglary, you may lose thousands of dollars.
- If work you do has errors that lead to financial losses or embarrassment for a client, you may find yourself on the wrong end of an "errors and omissions" liability claim.
- If you do product demonstrations and someone becomes ill or injured as a result of using the product you are showcasing, you may be sued for medical costs.
- If you travel to your clients’ property to do your work, such as with a lawn care or home-organization business, and you inadvertently damage something of great value to your client, you may be sued for property damage.
There are a number of instances where those who run a home-based business may find themselves in need of a suitable home business insurance policy.
What Does In-Home Business Insurance Cover?
An insurance policy for your home-based business can provide the following:
- Liability coverage: This provides insurance to shield you from losses due to liability claims. A home-business insurance policy will allow you to purchase between $300,000 and $1 million in liability coverage.
- Property coverage: This provides insurance to shield you from loss or damage to your business assets, including computers and other equipment, merchandise, materials and inventory. You can purchase up to $10,000 in property coverage with a home business insurance plan.
- Lost income coverage: If you are forced to temporarily cease business operations due to damage caused by a covered event, this insurance will enable you to continue receiving the income necessary to pay employees and bills for up to one year.
Depending on the insurance provider you choose, you may have other coverage options available to you. Some policies will even allow you to include your coverage for up to three employees.