Types of Insurance Plans a Home-Based Business Needs

Are you one of those lucky people who work from the comfort of their homes?

While working from home certainly has its perks, there's usually a lot more to navigate as a home-based business owner. In particular, it can be difficult to figure out what types of insurance plans you need for your home-based business. 

If you're confused about what types of insurance plans you actually need, you've come to the right place. 

Read on to discover the types of insurance you need as a home-based business owner. 


General Liability 

One of the most important types of insurance to invest in as a home-based business owner is general liability insurance. 

With general liability insurance, you'll be covered for claims arising from damage to property, bodily injury, or personal injury that's due to your business' products or operations. 

These policies also typically protect you from legal costs. Oftentimes, the insurance company will provide you with a lawyer to defend you in the event a claim has been filed. 

Here are a few examples of situations in which general liability insurance would be useful for home-based business owners:

• If you run a consulting business out of your home, your general liability insurance would protect you should someone slip and fall in your home office

• If you run a car accessory business and you produce an accessory that causes damage to people's cars, then your liability insurance would cover the property damage to those cars

• If you injure yourself while working at home on your business, your liability insurance may cover your personal injury costs

• If a customer sues you for breach of contract, then your policy should cover the legal costs, and you should be provided with a lawyer to defend you

As you can see, there are a lot of situations in which general liability insurance may be useful. 


Business Owner's Policy 

A business owner's policy includes general liability insurance (as explained above) as well as property insurance for buildings and their contents. Additionally, this type of policy offers business interruption insurance. 

This means that if your home or property is damaged and you lose out on income as a result, then your insurance company will pay for part or all of what you normally would have earned during this time period. 

For example, let's say you build a website to sell your arts and crafts on. Then, one day your art studio is damaged due to a fire. 

Your business owner's policy won't only cover damage to your business assets, but it'll also cover the income you lose as you rebuild your business. Your policy may even cover the associated with operating from a temporary workspace until things are back to normal. 


Errors and Omissions Policy 

Errors and omissions insurance, also known as professional liability insurance, covers you in the event that a client claims you didn't complete a job or you did it incorrectly, and in doing so, cost them money. 

Some examples of when an errors and omissions policy would come in handy include:

• Lawyers / Legal Consultants: If you fail to uncover something while researching a case, you could be sued for negligence

• Consultants: If the advice you gave caused harm to a client's business, then you could be sued for damages

• Title Search Professional: If a property buyer suffers a loss because you failed to properly research title and ownership history, then they could sue you for damages

While these policies tend to be a bit more expensive, they're very useful for those who fall into any of the above home-based careers. 


Homeowner's Insurance 

While it's important for every homeowner to have homeowner's insurance, it's especially important for those who run their business out of their home. 

When shopping for homeowner's insurance, you'll need to make sure you choose a policy that covers you if you're running your business from home. Some insurance policies won't cover you if you have clients coming in and out of your home, or they won't cover parts of your home that are used for business. 

So, it's very important to understand what exactly your policy covers. 

If you already have a homeowner's insurance policy, you may be able to add certain endorsements to ensure that your business is covered. These endorsements will come with an additional premium. 

The rate you receive will depend on things like:

• Whether you have visitors or employees coming into your home
• Whether you work with any flammable or hazardous materials
• The type of business you conduct from home

For example, let's say you run an e-commerce business in which you deal rare coins and collectibles from your home. In this case, you'll want to make sure your policy protects you in the event of a theft. 


Contents Insurance 

Contents insurance may already come with your homeowner's insurance policy. 

But if it doesn't, or you're renting your home, then this is another important type of insurance to consider. Contents insurance covers you in the event that there's damage or theft to the things inside your home. 

If you stock equipment or products in your home for your business, this type of insurance is crucial. 


Do Online Businesses Need Insurance? 

What if you conduct your business entirely online? If this is the case, you still need insurance. 

Here are some examples of situations where your online business would need insurance:

• Your clients ask for proof of it (this is more common than you think)
• Contractors visit your home
• Local, state, or federal law requires it
• You have a lot of expensive equipment in your home

You could also be held liable if one of your employees causes damage to a client or their business. 


Types of Insurance Plans - Are You Ready to Be Insured? 

Now that you know about the different types of insurance plans for home-based businesses, it's time to figure out which plans you need. 

While signing up for these types of insurance plans will cost you some extra money, you'll be thankful for the coverage when you have an incident during business hours. 

Be sure to check back in with our blog for more tips and tricks for running a home business! Visit the Insurance section of the Bootstrap Business Blog to learn more about different types of insurance plans and protect your home biz.