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4 Types of Business Insurance for Your Home-Based Business

Home based business insurance

Running a business in your home can cut out a lot of overhead expenses, but business insurance is something every entrepreneur should consider. You might even be legally required to have some form of insurance for your business.

Home based business insurance

Let’s look at four types of business insurance that you might need for your home-based company.

1.   General Liability Insurance


General liability insurance is one of the most basic types of business insurance that you should consider. These policies protect you if someone gets injured while on they’re at your business. For example, if someone visits your home salon and gets burned by a hairdryer, a liability policy can protect you.

These general liability policies can also protect you if someone claims that you or your business damaged their reputation in some way. General liability insurance covers you if someone complains that your business hurt them, physically or otherwise.

2. Property Insurance

If you’re counting on your homeowner’s insurance to cover your equipment, think again. This protection is often significantly limited or excluded from homeowner’s policies.

However, you might be able to add business property coverage to your existing homeowner’s insurance. Another option would be to apply for an in-home business insurance policy that’s separate from your homeowner’s insurance. This will give you higher coverage limits for equipment that might get damaged in an emergency, like a fire.

3. Worker’s Compensation Insurance

If your home-based business has employees, rather than independent contractors, most states will require you to carry worker’s compensation insurance.

Worker’s compensation covers employees who are injured while working for your company. It will cover their medical care and their wages during the time they miss work. For people in more dangerous lines of work, such as construction, can also consider getting life insurance.

4. Professional Liability Insurance

Professional liability insurance is different from general liability insurance. These policies protect you against injury claims that stem from your professional negligence. For example, if you’re an attorney with a home-based practice, you should get professional liability insurance to cover you if a client claims that you committed malpractice.

This is the same thing as errors and omissions insurance. These two types of policies used to be different in that professional liability insurance would cover professionals like lawyers and doctors while “E&O” policies would cover other service providers. But now the terms are used interchangeably.

Professional liability insurance covers things like the legal costs involved in defending yourself against negligence or malpractice claims.

For example, an author or publisher who releases a book that’s highly critical of someone might carry E&O insurance to help defend them against potential lawsuits. A home-based chiropractor could also have a professional liability policy to protect them against claims of malpractice if they injure a patient. Other types of professionals who might need these policies are architects, accountants, and financial advisors.

Not every home-based business will need all of these insurance policies. Consider which legal requirements and risks you face, and you and your insurance provider can choose the right policies for your business.