Secure Your Hustle: Home-Based Business Insurance Guide
What if you were accidentally putting the best job you ever had in danger?
For many people, operating their own company from home is a dream come true. However, what many of these entrepreneurs do not know is how badly they need business insurance for home-based businesses.
Some of the ones who need this most avoid getting it because they do not know what it is and why it is so important. Ready to learn more about how this policy can protect your bottom line? Keep reading to discover everything you need to know.
The Importance of Insurance for Your Home-Based Venture
If you do not already have small business insurance, chances are that you are asking if you really need business insurance. The truth is that every company benefits from this kind of policy, even if you are effectively the boss and all of the workers rolled into one.
For example, if you ever have customers visit your house, then you need liability coverage. Similarly, if you keep the products you make in your house or store valuable equipment there, you may need commercial property coverage. Should you happen to use your vehicle for work (perhaps making deliveries or otherwise carrying products around), you may need a commercial auto policy.
Those are just a few types of protection offered by a business policy. Below, you will find more info about each of them that will help you decide whether your business needs this added level of protection.
Understanding In-Home Business Insurance Essentials
For both entrepreneurs and individuals, the specifics of a commercial policy can be more than a little confusing. That big list of different coverage types can be intimidating, and you may be stuck asking simple questions like “What does this even cover?” In particular, new business owners have much to learn about commercial insurance.
By understanding more about each part of a home-based business policy, you can better understand the value of the policy as a whole. And you might be pleasantly surprised by the reasons why liability insurance is vital for your business.
What Does General Liability Insurance Cover?
The primary function of general liability coverage is to financially protect you in the event of a lawsuit. How would a lawsuit happen for a home-based business? If customers ever visit you at the house, there is always a chance they will get injured and hold you responsible. Should they try to sue, this will help pay for your legal fees.
Primarily, this policy is made for situations where someone claims that your actions caused them bodily harm or even property damage (for example, someone slips down your stairs, breaking both a phone and an elbow). If you are a property owner, you likely already have this kind of liability protection via your home coverage. That said, some entrepreneurs choose to insure both their business and their house separately for additional financial protection.
The Role of Professional Liability Insurance in Protecting Your Business
While general liability insurance is made for situations where a customer thinks you caused them bodily harm or property damage, professional liability coverage is made to cover a wider range of claims. For example, you are protected if a customer sues you for breaking a contract, doing substandard work, being negligent, or making errors and omissions.
It is generally harder for someone to prove that you did any of these things. For example, whether an owner perfectly upheld a contract or did a job to industry standards is often in the eye of the beholder. However, the abstract nature of such claims will not necessarily prevent customers from filing a lawsuit against you, so it is important to have protection in place ahead of time.
Types of Insurance Every Home-Based Business Should Consider
When it comes to getting in-home business insurance, there is good news and bad news. The good news is that you have many different policies to choose from, allowing you to customize a policy suited to your hustle. The bad news is that most entrepreneurs do not know enough about the types of coverage available to make the best choice.
Below, you will find a quick explainer of the most common types of policies that small companies like your own need. This should allow you to determine whether you need such a policy and, if so, just how much coverage is necessary.
General Liability
General liability helps cover legal fees if a customer claims that you caused them bodily harm or property damage. In short, if you ever have clients or third parties visit your house during the course of doing business, you likely need this coverage. Likewise, if you make and sell granola and someone claims they broke a tooth on your product, this coverage helps to protect you financially.
Professional Liability
Professional liability protects against customers suing you for things like breach of contract, delivering substandard service, making errors and omissions, or otherwise being negligent. Most entrepreneurs who deliver products or regularly sign contracts need this coverage because you never know what a customer will sue over, and this policy offers you multiple layers of protection for different situations.
Commercial Automotive Insurance
As the name implies, commercial automotive insurance is a form of car policy for vehicles that are used for work purposes. Like a more robust personal auto policy, this can provide liability, collision, and comprehensive coverage that pays for repairs to your vehicle as well as any damage you may cause. Whether an entrepreneur needs this level of protection mostly comes down to whether they ever use a car in the course of doing business.
Business Owner Policy
A business owner policy (BOP) offers several kinds of protection that a home-based company might need. For example, it offers protection for the structures on your property as well as protection for your equipment above and beyond what a homeowners insurance offers. It can also financially protect you if inventory inside your house gets damaged or destroyed or you face a temporary loss of income. Collectively, these reasons are why a BOP may be right for your business.
Evaluating Your Home Business Risks
Still on the fence about getting insurance for your home business? Some entrepreneurs hesitate because they already have property owner coverage and wonder whether they need both home and business insurance. Others hold off because they are wondering how getting a new policy will affect the general cost structure of their company. You may even be wondering, “Does my insurer need to know if my business is home-based?”
Below, you will find the information necessary to answer these questions. After that, you should have a better idea of how your own company can benefit from this coverage.
Assessing Whether Your Homeowners Insurance Is Enough
If you own both your house and a business, then you probably already have homeowners insurance. In that case, you are probably wondering whether you really need to take out an entirely separate policy or if your existing house coverage will offer enough protection.
The truth is that for most entrepreneurs who work from their house, a homeowners policy is likely not enough. For one thing, your existing plan will likely only cover about $2,500 in professional equipment. If you have specialized equipment or even just a robust computer, monitor, and printer, this might not be enough to protect you if that equipment is damaged, stolen, or destroyed.
Additionally, your property owner policy is primarily designed to protect the house and the property inside. While the liability protection of such a plan can help protect you if a visiting customer gets injured and blames you, this will not protect you from lawsuits alleging breach of contract, negligence, or making substandard products.
Cost Management Strategies for Home Business Insurance
Do you want the protection of insurance while saving as much as possible on your policy? In that case, there are a few proven cost management strategies you can utilize.
For example, you should always consider bundling all your policies through the same carrier. This is a great way of saving when you have, say, a property owner and an automobile policy. By rolling commercial coverage into the bundle, you can automatically save even more.
As with a personal policy, you can also tweak the deductibles on your policy to best meet your individual needs. A good carrier can help you customize the plan so that you have the exact protection you need without having to pay for unnecessary extra coverage.
Speaking of policies, the single best way to save on commercial insurance is to not get more than you need. Not every home-based company needs commercial automotive coverage, for example. By speaking with a reputable carrier, you can get only the policies you need and never have to worry that you are paying too much for something you will never really use.
Taking the Next Steps: Securing Your Home-Based Business Insurance
Now you know how to secure your hustle with home-based business insurance. But do you know who you can count on to help protect your company?
At InsureOne, we have always supported the dreams of entrepreneurs like yourself and are ready to offer the insurance you need to safeguard everything you have built. When you are ready for both protection and peace of mind, come get a quote online. Of course, you can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to find an InsureOne office near you.