Do I Need Insurance for My Home Based Business?

More people are working from home than ever before. The COVID-19 pandemic has changes the most businesses operate. If you run a small business out of your home you might be wondering if you need a business insurance policy.

You might be surprised to know that half of businesses in America are home-based. Whether you are a professional consultant, a dog walker, an Amazon Reseller or a cosmetic sales associate odds are good that you do not carry business insurance or believe you have coverage on your homeowners policy for your business.

Almost every homeowner policy excludes business pursuits from your personal liability coverage. Although most homeowner policies exclude home-based businesses it should be your first place to inquire about coverage. Some insurers are willing to issue an endorsement that will extend coverage to the home business. Typically, there's an additional fee, but it is usually inexpensive and worth every cent. If this is not a possibility there are many insurance companies that can write a separate Business Owner Policy (BOP) that can protect you, your business and your business property. Typical premiums for small in-home businesses are around $500 per year.  Homeowners policies also have very limited property coverage for business property. If you have say $50,000 in inventory that you sell on Amazon in your garage and have a fire or theft, you will likely be limited to $2,000 on your homeowner or renters policy. 

If you provide professional advice or services such as consulting, accounting, legal or otherwise you should seriously consider adding professional liability (Errors & Omissions) coverage. This is typically more expensive coverage since it is more likely to be used if you are in a professional field. We typically see minimum premiums in the $900 per year range for $1,000,000 in coverage.

There could be additional insurance needs as you start and grow your home-based business. Remember that California, as well as most states, require workers’ compensation insurance for employees. If you are growing and add employees, even if they work from their home as well, So before, it’s important to add worker’s compensation insurance coverage. Feel free to contact us if you have any questions about your home-based business insurance needs or anything else.