The desire to break free from a 9-to-5 desk job has been spreading throughout the U.S. workforce for years.In 2016, more than 40 percent of Americans performed some kind of freelance work. And that number grows every year.
The draws of being your own boss and working from home are obvious. But many people don’t consider the other elements that go into running your own home-based business.
One of those elements is home-based business insurance.
Insurance protects your business, employees, and clients from accidents. It keeps your investment safe and keeps cash coming in if your business has to be put on hold.
When it comes to insurance for home-based business, there are several options. Keep reading to learn a few, and to find out which option is best for your home-based business.
Many home-based business owners make the mistake of thinking that because they operate their business out of their home, that their homeowner’s insurance policy covers them.
But homeowner’s insurance is designed only to cover the risks of residential living. Once your actions within your home cross over into the world of business, your homeowner’s insurance no longer applies.
There are a small number of home-based businesses that can get away without any insurance. If you never meet with clients, deal with inventory, or have employees, you won’t need insurance to cover the risks associated with these.
However, there are a number of other risks that many business owners overlook. For instance, if you store any type of client information on your computer, you need insurance to protect that.
If your business receives mail, and the mailman was to slip on your property, your homeowner’s insurance policy wouldn’t even cover that. So think twice before you choose to forgo insurance for your home-based business.
Rider on a Homeowners Insurance Policy
While your homeowner’s insurance isn’t enough to protect your home-based business, you can use it to obtain inexpensive insurance to cover your business.
Adding a rider or add-on to your homeowner’s or renter’s insurance is perhaps the cheapest way to cover your business.
Depending on your insurance provider, an add-on for a home-based business will cost around $100. For that, you will get around $2,500 in coverage.
This coverage is ideal for businesses with only a small amount of property, like laptops and other inexpensive equipment. If your home were damaged in a fire or natural disaster, this coverage would help get you back up and running.
This type of insurance would not cover anyone but the homeowner. For example, if clients meet at your home or if you have employees, this insurance would not cover them if they were to get hurt while at your home.
This coverage also would not cover the mailman in the earlier scenario. While a rider on your homeowner’s insurance will save you money up front, it will cost you far more to cover the medical expenses of your injured mailman, employee, or client.
Only choose this type of coverage if you truly are working on your own, over the inernet, with minimal equipment.
In-home business policy
If you have employees, you need a different home business insurance to cover them as well as yourself and your investment in your business.
An in-home business policy is a good option if your business has fewer than 3 employees and less than $10,000 invested in your business.
These policies are designed to be small home business insurance options. They provide coverage to replace equipment in the event of a disaster as well as liability.
If a client, employee, or even the mailman gets injured at your home while there for business purposes, you’ll be covered, up the amount listed in your policy.
These policies are each designed to cover a specific type of business. Depending on your in-home business, the area you operate in, or your provider. But in most cases, you can get a policy that provides around $10,000 in coverage for between $250 and $500 per year.
While $10,000 in coverage may be enough for a new business, a part-time operation, or a very small company, that’s not enough coverage for everyone.
If you keep inventory in your home, have multiple pieces of equipment, as well as several employees and clients coming and going, the associated costs can add up very quickly.
Business owner’s policy
If you have more than 3 employees or more than $10,000 in expenses, you need more than a simple in-home business policy.
Your next option is a business owner’s policy. This is the most common type of coverage for small businesses, including both home-based and brick-and-mortar operations.
It provides full coverage for all aspects of your business. This includes loss records, damaged property, employee or client injury, and malpractice. It will even cover a loss of income in the event that something prevents your business from operating.
Even if your business is very small, a business owner’s policy might be the best choice for you.
For instance, if you run a daycare out of your home, you’ll need more than $10,000 in protection in case something were to happen to children in your care.
If you run a catering company, you need coverage in case something prevents you from completing a job at the last minute. You also need protection in case clients were to get sick after eating your food.
If you sell physical products, this coverage can also protect you against lawsuits if a client gets hurt while using what you’ve sold to them.
Just because your business is small and home-based doesn’t mean that you don’t need protection.
Choosing the Right Home-based Business Insurance
No matter the size or type of your home-based business, protecting your investment and your own finances is essential.
Once you’ve decided which type of home-based insurance policy is right for you, it’s time to search for the right provider.
Start your own free quote today to find out what kind of coverage you could be getting for your home-based business!