What to Look for When Choosing Home-Based Business Insurance

Between the rise of e-commerce and a global pandemic keeping conventional offices and shared workspaces closed, more people than ever are running businesses from their own homes. However, many people who run home-based businesses do not take out home-based business insurance policies or assume that their homeowner or renter insurance will cover the cost of any accidents.

Fortunately, many types of business insurance can be applied to home-based businesses, and many insurance providers offer coverage plans specifically designed for home-based businesses. If you want to make sure your home-based business is comprehensively insured, keep an eye out for plans offering the following types of coverage:

Professional Liability Insurance

If your home-based business offers professional services, such as copywriting, graphic design, or financial advice, professional liability insurance can be extremely useful. These plans provide coverage and financial assistance if a client takes out a legal claim against your business.

A good professional liability insurance plan will protect you against lawsuits based on professional negligence or failure to deliver contracted work on time. These plans are particularly useful if a client files a lawsuit based on spurious grounds; their case probably won't hold up in court, but you may not be able to contest the lawsuit at all if you can't afford to pay legal costs out-of-pocket.

Product Liability Insurance

These insurance plans are more suitable for home-based businesses that sell physical products. If a product you sell causes damage to people and/or property, a product liability insurance plan will cover your legal defense costs if a lawsuit is filed. 

Bear in mind that a client can make a claim against you for selling them a faulty product, even if your business did not manufacture the product. This makes product liability insurance particularly important for third-party sales businesses, and many manufacturers will not work with third-party suppliers who do not have a suitable product liability plan.

Home-Based Business Property Insurance

You might assume that any equipment you use while running your home-based business is already covered under your existing home property insurance plan(s). However, most property insurance policies offered to renters and homeowners will only cover certain types of property, and any tools or equipment used solely for business purposes may receive no coverage at all.

Items that are covered by your existing property insurance may also cost significantly more than the maximum coverage provided by your plan. For example, a home property insurance plan that provides up to $2000 of coverage isn't much help if you need to replace a 3D printer that costs $10,000. Very expensive pieces of equipment should usually be covered by individual insurance plans.

If your home business equipment is less expensive, but still isn't covered by your existing plan, you may be able to upgrade your existing property coverage with an endorsement. Adding an endorsement to your existing home property plan can significantly raise your maximum payout limit and can also provide coverage for items that weren't covered by the original plan.

Workers' Compensation Insurance

If you run a home-based business with one or more employees (besides yourself), obtaining a workers' compensation insurance plan is vital. These plans will pay for any lost earnings or medical costs if your employee(s) become sick or injured while working for your business.

Workers’ compensation insurance is particularly important for home businesses based in Illinois. State law requires that any employee of your business must be covered by a suitable compensation plan, even if they only work for you part-time. Family members who work for you must also be covered in most circumstances. 

These are just some of the most useful insurance plans available to home-based business owners. Depending on the nature of your business, you may also benefit from other types of coverage, such as commercial automotive insurance. For more advice on business insurance plans for home-based businesses, contact the experts at Illinois Insurance Center.