Did you know there are over 16 million home-based businesses in the United States? That’s right–and that makes up a huge percentage of the small businesses in the country, too.
While it may not be at the top of your mind, the matter is that, yes: home-based businesses should have insurance, the same way businesses with a physical storefront, office, or warehouse do! Home-based businesses face risks, although they may not look the same way, and they could be vulnerable to potential liabilities and losses. Here’s what you need to know about insuring a home-based business:
What is home-based business insurance?
Home-based business insurance is an insurance policy or package of policies designed to protect businesses operating out of a person’s home. While homeowners insurance might offer some limited coverage for business equipment, it typically does not cover business-related liabilities or losses. Home-based business insurance can include general liability, property insurance for business equipment, and even business interruption coverage to help cover lost income due to unforeseen events. Home-based business insurance can help ensure that home-based business owners have the comprehensive protection they need, and the protection that’s best suited to their business activities.
Who needs home-based business insurance?
Home-based business insurance is essential for anyone running a business from their home, as standard homeowners insurance typically does not cover business-related risks. Here are some examples of home-based businesses that should consider this insurance:- Freelancers
- Consultants
- Tutors
- Crafters and artisans
- Online sellers
- Accountants
- Personal trainers
- Daycare providers
- Writers and authors
- Photographers
What coverage do home-based business owners need?
The exact coverage a home-based business needs will vary based on that type of business, so it helps to work with an agent and figure out what kind of coverage you need exactly.
Here are some examples of coverages that could be of benefit to you as a home-based business owner:
General Liability Insurance
A general liability policy is perhaps the most basic liability coverage any commercial operation should have–if nothing else, then you should at least have this. General liability insurance covers you for the basic risks of running a home-based business, including injuries to customers, whether physical or personal, and more.
Business Owner’s Policy
This is one of the easiest and most cost-effective ways for individuals who run a business out of their homes to get comprehensive insurance. A BOP (business owner’s policy) combines general liability and commercial property insurance into one cost-effective solution.
Professional Liability Insurance
E&O insurance, as it’s also called, is designed to cover lawsuits pertaining to the quality of the services that you provide. This could be something as simple as a couple at a wedding sueing a photographer for poor quality photos at their event. Professional liability insurance also helps accountants, therapists, and other professionals in their day-to-day work.
Commercial Auto Insurance
Businesses with vehicles won’t be able to benefit from personal auto insurance, and will need separate commercial-specific insurance to cover their automobiles. Commercial auto insurance is the solution.
How much does it cost to buy home-based business insurance?
The cost of home-based business insurance varies widely based on factors such as the type of business, coverage limits, location, and the specific risks involved. If you need a precise approximation, request a free quote from one of our agents at AHI Group! Typically, premiums can range from a few hundred to several thousand dollars annually. Here are some factors that influence the cost:
- Type of business
- Location
- Coverage limits
- Business size
- Number of employees (if any)
- Claims history
- Deductibles
- Business equipment value
With this information, it’s probably a fair assumption that insuring a home-based daycare would probably cost more to insure than covering a freelance writing gig. A few children desecrating your wallpaper or swallowing toxic crayons would probably cost more to recover from then a few typos on a website–but then again, both face potential losses! Regardless of the degree of risk, your business is your business. Insurance can help keep it running.
What information do I need to get a home-based business insurance quote?
To obtain a home-based business insurance quote, you’ll need to provide specific details about your business. This helps insurers assess the level of risk and determine the appropriate coverage. Your AHI agent may request the following key pieces of information about your business:
- Business name and address
- Type of business
- Description of business activities
- Annual revenue
- Number of employees
- Value of business equipment
- Claims history
- Desired coverage limits
- Existing insurance policies
- Business structure (e.g., sole proprietorship, LLC)
Home-based businesses are incredibly popular in the US, with the number of arts and crafts shops on Etsy.com jumping from 2.6 million (2019) to 7.5 million (2021) in a short few years. That’s just arts and crafts, too–there’s scores of home-based businesses that predated the pandemic, and there will be hundreds of thousands more afterwards!
The process to getting home-based business insurance is easy with AHI Group. All you need to do is simply give us a call, tell us a bit about what you do and your business, and you’ll be well on your way to getting a free quote.
