Starting a home-based business comes with many unique challenges. Your home is now your workplace, which means your home insurance likely doesn’t provide adequate protection. That’s why getting tailored business insurance is essential for home business owners who want full protection.
But with endless options to choose from, how do you determine what type and how much business insurance you need? Do you go for General Liability only or add other policies too? Does it have to be expensive to get good coverage?
This comprehensive guide covers everything home-based entrepreneurs need to know about getting properly insured. Read on to learn:
- A cost breakdown of popular business insurance policies
- Policy specifics like what’s covered and what’s not
- Factors that influence costs (risk, industry, revenue, etc.)
- Top 7 insurance providers for home businesses
- FAQs on coverage amounts and requirements
Plus, we’ll compare two top recommended insurance packages. So you can evaluate good insurance options for YOUR home business’s unique needs.
Let’s dive in!
Overview of Top 5 Business Insurance Policies for Home-Based Businesses
Protecting your home business starts with understanding the main insurance policy types. While there are others, these key policies should be on your radar:
| Policy Type | What It Covers | Estimated Yearly Cost* |
|---|---|---|
| General Liability | Bodily injury and property damage claims from 3rd parties | $500 – $1,000+ |
| Professional Liability | Lawsuits alleging your services injured or didn’t meet standards | $600+ |
| Product Liability | Injuries from products you make/sell | $1,300+ |
| Commercial Property | Damage to business property due to covered causes like fire, theft, etc. | $1,000+ |
| Business Owners Policy (BOP) | Combines General Liability, Property, and more into one policy | $1,200+ |
*Cost ranges are estimates only. Your actual quote will vary based on risk factors.
Clearly, costs add up fast. Getting ALL these policies could set you back a few thousand dollars per year.
So how do you decide what insurance to get without breaking the bank?
The key is evaluating your unique risks…
3 Key Factors That Determine Your Business Insurance Cost
Home businesses span countless industries, from bakers to bloggers and beyond. So insurance needs vary widely even within the home-based space.
While getting quotes is the only way to know your exact pricing, these 3 major factors generally dictate costs across the board:
1. Your Industry & Services
Businesses in higher-risk industries like construction pay far more than informational bloggers or artists. Why? There’s greater potential for damage and claims.
For example, here’s how General Liability pricing differs between industries:
- Consultant/Professional Services: $600/year
- Retailer/Crafter: $700-$1,500/year
- Remodeler/Contractor: $2,000-$5,000+/year
So consider how your business services and industry fit into the risk spectrum. Higher risk = higher insurance premiums.
2. Your Annual Revenue
Insurers ask for your gross annual revenue to determine policy limits and pricing. Typically, more revenue means higher liability limits are expected. And getting sufficient coverage limits costs more in premiums.
For example:
- Home business making $30k/year may only need $500k-$1 million in General Liability coverage.
- But a $200k/year business may prefer $2 million+ coverage for better protection.
Check that your anticipated revenue aligns with the coverage limits you choose. Underinsuring to reduce costs may cost you BIG time if a claim exceeds limits.
3. Your Claims & Losses History
Like car insurance, insurers view past claims as an indicator of future risk. Multiple past liability claims or property losses can motivate significantly higher premiums.
Having no claims generally earns you “clean risk” status for cheaper rates. But recent frequent or expensive claims spell trouble.
The key is keeping losses minimal and maintaining clean risk status where possible. Safety precautions and risk management best practices are crucial for home businesses too.
Okay, so while costs vary widely, virtually all home businesses need SOME level of insurance.
Next, let’s explore top recommended insurance packages tailored to home-based business needs…
Home Business Insurance Package Comparison
Rather than piecing policies together yourself from scratch, an insurance package bundles recommended coverage into one simpler policy.
We compare packages from two top-rated providers below based on affordability, breadth of coverage, ease of use, and positive customer feedback.
CoverWallet: Well-Rounded Starter Business Insurance
CoverWallet offers an easy online quoting and buying experience perfect for home business beginners.
Their Home Business Insurance package includes these five core coverages:
- General Liability – $1 million policy with expanded definition of “bodily injury”.
- Professional Liability – $1 million in protection.
- Commercial Property – $10k in coverage for business equipment etc. Higher limits available.
- Hired & Non-Owned Auto – $1 million liability if using personal car for business.
- Loss of Income – $5k coverage if disaster halts business operations.
| Pros | Cons |
|---|---|
| ✅ Designed specifically for home businesses | ❌ No cyber or product liability yet |
| ✅ Contractors eligible for coverage | ❌ Limited loss of income coverage |
| ✅ Easy & fast online application process | |
| ✅ Premiums as low as $37/month |
This affordable package covers all basics for home business beginners. Main downsides are lack of product liability and modest income loss limits. But otherwise an excellent starter insurance option.
Next Insurance: Comprehensive Protection
What sets Next Insurance apart is incredible flexibility to customize coverage. Their policies serve both home AND commercial-facility businesses.
Next Home Business Insurance includes:
- General Liability – $1 million limit.
- Professional Liability – Optional add-on.
- Business Property – $10k limit standard but customizable.
- Business Income Loss – Optional customizable coverage available.
- Hired & Non-Owned Auto Liability – Optional add-on.
- Plus over 70+ optional “business essentials” coverage add-ons!
| Pros | Cons |
|---|---|
| ✅ Fully customizable protection | ❌ Slightly more complex setup |
| ✅ Coverage follows you on-the-go | |
| ✅ 70+ coverage add-on options | |
| ✅ Well-suited for growing businesses |
In short, Next Insurance offers incredibly versatile and customizable protection. But with more decisions required upfront. Perfect for business owners who know exactly what they need.
Which Is Better for Your Home Business?
Ultimately, NEITHER package fits every unique home business. The right choice depends on your budget, risk level, growth goals, and specific needs.
As a general rule of thumb we recommend:
- CoverWallet for brand new home businesses wanting fast and affordable covered basics.
- Next Insurance if needing highly customized protection levels as you scale.
We hope this side-by-side comparison helps narrow down top contenders for YOUR home business situation.
Just remember protection needs evolve over time. Re-evaluate insurance needs with growth milestones so coverage keeps pace too.
Now let’s tackle some common questions home business owners have about insurance requirements and costs…
Frequently Asked Questions (FAQs)
Getting properly insured still leaves many home CEOs with lingering questions. So we compiled top FAQs about home business insurance requirements, costs, and claims below:
Q: Is business insurance legally required to operate my home business?
This varies by state and local jurisdictions. Some states require a state-level business license and/or certain insurance coverage to legally operate – even home businesses. Many have NO formal registration or insurance requirements whatsoever.
Key takeaway – Research state and local business license and insurance laws in the jurisdictions you operate in. Don’t assume you’re exempt from requirements as a home business!
Q: How much liability insurance do I need for my small home business?
General guidance is to match General Liability policy limits to your annual revenue. Here are common thresholds:
- Early Stage – $500k – $1 million coverage for under $50k/year
- Growing – $1 million to $2 million coverage for $50k – $250k/year
- Mid-Stage – $2 million+ coverage for $250k+/year revenue
But the best gauge is your max risk. If your service could reasonably cause higher cost claims if something goes wrong, get higher limits. An independent agent can advise on prudent coverage minimums fitting your unique risk profile.
Q: Why is business insurance so expensive even for home businesses?
Commercial policies consider even modest home businesses “high risk” compared to personal insurance. Why? More likelihood of expensive property, liability and income loss claims. Insurers price premiums proportionate to that elevated risk likelihood vs. a home policy.
But costs run the full gamut depending on coverage types, limits and deductibles chose. We recommend starting coverage lean then adding on as makes sense for your risk and growth stage. Don’t overbuy or you may unnecessarily overspend in early phases.
Q: What details do I need to get an accurate quote?
To generate an accurate quote insurers will want to know:
- Your business legal name and structure
- Physical location(s) where you operate
- Key details of your operations like services, products, sizes, revenue etc.
- Claims history and current liability coverage (if any)
Come prepared with this critical info handy before requesting quotes. It drives all cost calculations!
Q: Can I get business insurance coverage NOW if just starting?
Yes absolutely! Some providers like CoverWallet even offer instant online quotes -> purchases to get you protected in minutes 24/7. Others may take a little longer depending on underlying carrier response times.
Just have key details outlined above handy. And know it’s 100% fine to buy commercial policies BEFORE formally incorporating or registering a business name legally. You can adjust the policy later after entity formation paperwork is done.
Don’t let corporate formation delays slow getting insured if you have active operations or client work underway!
We hope these common FAQs clear up some frequent areas of confusion around requirements, costs and the quoting process.
Final Takeaways – Finding Insurance for YOUR Home Business
With clearer insight now around popular policies, cost factors, insurance packages and FAQs – what final guidance can we offer?
Here are key takeaways as you seek tailored protection for YOUR unique home business as a final recap:
✅ Clearly understand your service offerings and risk profiles. Then explore baseline coverage minimums prudent for that risk class. Build out added coverage from there matching growth plans and loss scenarios to avoid.
✅ Weigh bundled insurance packages vs. standalone policies depending on need for simplicity vs customizability. Packages simplify, but mixing/matching standalone policies enables precision fine-tuning coverage and limits.
✅ Get multiple quotes especially in early stages. Industry resource Insureon makes this easy getting multiple customized quotes for comparison from top national and regional carriers.
✅ Review policies annually as your business changes! Revenue growth, new product lines, and evolving risk profiles all impact insurance needs long-term. What suffices at the start likely requires revisiting down the road.
We know it’s A LOT to digest. But we hope this overview dispels some fears and uncertainties around properly protecting your prized home business. You worked too hard building it to leave things to chance!
You’ve got this. Now focus on growth confident a sound insurance strategy no longer has question marks 💪