What Insurance Policies Does a Home-Based Business Need?

As more people begin working from home rather than heading to the office, the common challenges of running a business from domestic premises are becoming a bigger talking point.

One of the most common questions would-be home-workers ask is whether or not they need specialist insurance, or any additional policies, to cover their operations. Here is a look at the facts of the matter and the hurdles you will need to overleap to get adequate protection in this context.

Considering your home-based business as a real business

Every business must consider getting general liability insurance. Regardless of your business, this type of insurance coverage is essential for several reasons. While many people think home-based businesses are some kind of ‘hobby’ or an informal business sector, home-based business owners should still protect their business from third-party injury claims. For instance, if you visit a customer’s house to repair something or perform any service, and someone gets into an accident because of any of your tools, they can sue you.

What does a general liability insurance coverage offer for home-based businesses? It protects you against slander or libel claims, so you can legally defend your business. Also, it protects you against damage to properties or rental premises (that aren’t your home), including a temporary office space and conference or training facilities. You will pay a lesser amount of general liability premiums because having a home-based business typically means less people visit your workplace. 

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The problem of complexity

The biggest barrier facing home-based business owners is that unless you are an insurance expert or have extensive experience in this area, the whole process of getting the right cover can be overwhelmingly complicated.

Thankfully services like PolicyScout make it simpler to pinpoint insurance for all situations, including working from home. Most importantly, by breaking down the barriers which stand between you and suitable insurance, you will avoid the worst-case scenario of procrastinating over procuring cover and suffering from a disaster in the interim.

Professional liability insurance or ‘errors and omissions’ business insurance is a vital aspect of your home-based business insurance. This insurance policy covers the legal cost associated with a negligence lawsuit, even if you haven’t committed a mistake. Your insurance provider will appoint a lawyer and cover the legal cost, up to the professional liability insurance policy limit.

Considering your existing cover

Whether you own or rent your home, you may already have a policy which delivers an appropriate level of cover as part of your existing home insurance deal.

This is usually only relevant for people who work from home and require very minimal equipment to fulfill their professional obligations, such as a laptop, a smartphone and a basic desk setup.

So long as the items you use for business purposes belong to you and are valued within the total of your contents cover, this may be enough. However, this will not fit everyone’s needs, so further scrutiny could be required.

Get a business-specific home insurance policy

A number of providers offer insurance policies which are specifically tailored to those running businesses out of their homes, bringing with them the benefits of having additional protections for any equipment you use for your work, as well as extra liability cover should that be necessary.

At the root, these in-home business insurance bundles will still be fairly close to standard home insurance, while also being closer to fully-fledged business insurance policies. If your business is handled almost entirely digitally, or your in-home operations are fairly limited in terms of the equipment involved, this could be the right choice.

Embrace an all-out business insurance product

One of the main reasons that you may need to consider getting an unmitigated business insurance policy, similar to the kind you would need if you had your own separate commercial premises from which to run your operations, is if customers need to physically visit your home.

This can apply to everyone from masseuses and makeup artists to craftspeople and psychotherapists. The liability coverage you receive will give you peace of mind during customer visits, while also meaning that you can focus on growing your business.

As mentioned earlier, if you are still uncertain about which kind of cover you need for your in-home business, seek expert advice rather than trying to find your way through this complex topic unassisted.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.