Do I need business insurance even if I work from home?
Yes. You should insure your business right away. Even if you are just starting out, it’s important to make sure you have the right coverage as you go along– you never want to have a claim and be uninsured.
What business insurance do I need if I work from home?
If you’re working from home, you need to fill the coverage gaps in your homeowners policy. Why? Because you could lose much more than your income if something bad happens. Even if you’re only making a little bit of money to start with, the amount you could lose could be much more, regardless of your income.
Many small business owners who work from home start with what’s called a business owner’s policy, which combines general liability insurance and business property insurance. Someone who makes a living by providing services or advice to clients (such as a consultant) should also consider professional liability insurance.
But won’t my homeowners insurance cover me if I work from home?
People who work from home often think their business activities are covered by a homeowners or renters policy.
However, most homeowners/renters policies provide little to no coverage for business operations. The most you can hope to get is a small amount of coverage for your business equipment, unless you endorse your policy for business. For example, if you run a daycare facility, you can add an endorsement to your pre-existing policy, but even then it would be limited to just a few children.
If you’re looking to protect your work-related equipment, consider business property insurance.
Homeowners insurance doesn’t cover the following business liabilities:
- Libel and slander (you’ll want general liability insurance, but if the libel or slander was personal in nature, your homeowners policy will cover the incident)
- Copyright infringement (but general liability insurance will)
- Liability for injuries to visitors or clients (this also falls under general liability insurance)
- Stolen computer data (a cyber liability policy would cover this)
- Injury to an employee (you’ll need workers’ compensation)
- Business vehicles (business auto insurance would cover them)
- Liability coverage for your professional services (professional liability insurance is highly recommended if you provide expertise or give advice for a living)
Your homeowners policy will sometimes cover a small amount of your business equipment.
The personal property part of your homeowners policy might not cover any of your business equipment, and even if it does, the limits (the maximum amount your insurer will pay in the event of a loss) might not be high enough. A typical policy only covers up to $500 in damages on your premises and $250 off-premises.
Best-case scenario: If you have a property-related claim, you get a small reimbursement for it.
Common risks for at-home businesses
- If a client visits your house to talk about an upcoming project and somehow leaves with a broken wrist, your homeowners policy might pay for medical, but you wouldn’t be covered, if the client sues you.
- Non-physical liabilities, such as copyright infringement, libel, or slander.
- If you drive vehicles for work, they might not be covered on your personal auto policy. Check out business auto insurance to learn more.
How much does home-based insurance coverage cost?
At-home businesses like freelancers and consultants are quite often considered “low risk” to insurance companies, which means coverage is pretty affordable.