A home-based business is any business that is centered in the home. As of 2018, there were 30.2 million small business in the United States, and 50% of them were home-based. As business becomes increasingly digital-first across industries, more professionals are choosing to operate out of their homes. Working from home offers a variety of benefits, including flexibility, cost savings, tax benefits, and eliminated commuting time.
Any business that meets the following criteria needs home-based business insurance:
Generally, any business that operates entirely or partially out of the home qualifies as a home-based business. Businesses that offer remote work also qualify. Recently, more and more businesses have moved some or all of their operations into the digital space. Therefore, many organizations could be considered home-based, regardless of field or industry. Common examples of home-based businesses include:
Home-based companies usually depend on equipment, such as computers, printers, scanners, and fax machines, to operate. Depending on industry, tools and equipment used by home-based businesses can be extremely expensive. For example, a service that distributes baked goods made in the home is reliant on mixers, ovens, dough proofers, bakeware, slicers, refrigerators, and fryers. Unfortunately, all of these items are extremely susceptible to damage and wear over time. A regular homeowners’ policy will typically have a very low limit for business equipment on residential property. Fortunately, business owners can purchase a homeowners’ policy endorsement that may double or triple that limit. You may also have the option to add homeowners’ liability endorsement to your policy. This covers third-party claims by customers or delivery personnel in the event of an injury sustained on the property. It is usually only available if policyholders do not have a lot of business-related visitors in the home.
All businesses need a businessowners’ insurance policy (BOP). A BOP combines the following three coverage into one policy:
Every business needs workers’ compensation coverage, regardless of whether it is home-based. If one of your employees injures himself or herself on the job, you could be responsible for covering their medical expenses and lost wages, in addition to any court or settlement costs should they decide to sue you. Workers’ compensation is absolutely essential, even if you operate out of the home and do not see a lot of immediate risks. Most states actually require businesses to carry workers’ compensation insurance, so make sure to check your local guidance
If your company uses vehicles to transport goods or employees, make deliveries, or anything else, it’s important to have commercial auto insurance. A personal auto policy often will not insure business-use automobiles unless it has been verified with the insurer that the vehicles are covered, which is uncommon. Personal policies also do not cover trucks larger than pickups or vehicles used for deliveries. Commercial auto coverage is critical if your business relies on vehicles in any capacity. It protects your business from the following auto-related issues:
Commercial auto coverage may also cover the cost of renting a replacement vehicle while your company car is being repaired. If the vehicle is a total loss, it can help to replace it after a covered accident.
Professional liability, or errors and omissions, is coverage that all businesses need. Anyone can make a mistake, and it should be expected that it will happen from time to time. It is important to be prepared for anything when it comes to your business, especially when you are providing services or advice to clients. Professional liability insurance covers third-party claims for financial losses that result from mistakes a business makes while serving clients. This type of insurance is especially critical for attorneys, consultants, accountants, and other professionals who operate from home.
Lots of home-based businesses store sensitive data on computers, such as:
When this data is compromised, it can be absolutely disastrous for a business. Businesses that operate online in any capacity are at-risk of a data breach. Outfitting your business with cyber insurance is a crucial part of protecting sensitive information and providing your clients with ethical and transparent service. It protects your business against legal fees associated with data leaks, as well as recovering compromised data, repairing damaged computer systems, and restoring personal identities of affected clients or employees. You can also choose coverage that includes protection against damage caused by viruses or cyberattacks, as well as credit monitoring and reputation-repairing services.
To start covering your home-based business, call 888-9OSPREY (888-967-7739) today or visit our insurance shop. Our underwriters can help you select the best insurance products and start protecting your business.