Summary
Home Based Business Insurance Coverage
If you’re earning income through a home based bakery, candle-making and retailing business, dog walking or pet sitting business, personal training business, or designing business, then you can protect yourself from risks through a tailored home-based business insurance coverage.
Home Based Business Insurance Coverage
If you’re earning income through a home based bakery, candle-making and retailing business, dog walking or pet sitting business, personal training business, or designing business, then you can protect yourself from risks through a tailored home-based business insurance coverage.
Tailored home-based business insurance isn’t required by law. However, you’ll need this if you’re selling items on large bulks as a vendor, want clients to avail services, or planning to make it big on online marketplaces (For example, amazon sellers are required to purchase business insurance and name Amazon as an additional insured).
Most home-based business insurance begins with liability insurance policies. These are then accompanied by other business insurance policies depending on the nature of your home based business. Let’s discuss what liability insurance is.
Home Based Business Liability Insurance
There are several types of liability insurance for home based businesses - general liability insurance, professional liability insurance, and more. The type of liability insurance available depends on the type of your home-based business. But still, in most cases, insurance companies will always allow you to get general liability insurance.
Home Based Business General Liability Insurance
It doesn’t matter whether you’re a caterer, writer/media professional, or any other kind of home based business possible, general liability insurance is always useful.
General liability insurance is the primary coverage offered in small home business insurance. This will protect you from:
Third-party personal injury claims - Your home based business caused an accident that resulted in clients, vendors, and other third parties incurring injuries. The injured parties then filed a claim and demanded you to pay for their pain, suffering, and medical costs
Third property damage claims - Your home based business caused an accident and the property of vendors, customers, and other third parties got damaged. Affected individuals filed a claim and want you to reimburse their losses
General liability insurance has optional policies. These optional policies allow general liability insurance to do more for you:
Advertising injury liability coverage
Products and completed operations coverage
Third-parties might accuse your home based business of committing reputational harm, plagiarizing an ad or any other promotional material, and failing to provide a service advertised. Advertising injury coverage will help you in such an event. Basically, this optional policy in general liability insurance will pay for defense costs and settlements if someone sues you for defamation, libel, slander, copyright infringement, and false advertising.
Add products and completed operations to general liability insurance if you’re a home-based personal trainer, app developer, interior designer, yoga instructor, etc. A service you accomplished might have caused personal injury or property damage to past clients. Products and completed operations coverage will cover defense costs, compensation, and other expenses if past clients decide to file a personal injury claim or property damage claim.
Public Liability Insurance for Home Based Businesses
Public liability insurance is a liability insurance that has the same function as general liability insurance.
To discuss things further, the language of public liability insurance is included in general liability insurance. Meaning that it’s the least comprehensive. Public liability insurance will only take care of personal injury claims and property damage claims from third parties. Meanwhile, general liability insurance is more comprehensive because it doesn’t only cover personal injury and property damage but also advertising injuries and claims arising from a completed product or service.
One quick clarification. Other sources state that general liability is more comprehensive than public liability because it can cater to employee claims and visitor claims. This is wrong. Public liability and general liability cater to claims from third parties - meaning customers, visitors, and others. None of the two caters to claims made by employees.
Home Based Business Professional Liability Insurance
Professional liability insurance is useful if you’re a home-based business making money by providing professional services to clients. Specifically, you need to get this liability insurance if you’re a home based:
While providing a service, you might commit an act constituting errors or omissions and end up causing economic or financial losses to clients. If clients decide to file negligence or malpractice claims, professional liability insurance takes care of defense costs, settlements, and other expenses on your behalf. Professional liability insurance doesn’t only cover negligence or malpractice but also:
Misrepresentation
Violation of good faith and fair dealing
Breach of confidentiality
Inaccurate advice
What is E&O Insurance?
On the other hand, professional liability insurance is also commonly known as E&O (errors and omissions) coverage. This will cover you in case someone sues you for negligence in your job. For example, if you own a software design business and your software is shipped with a virus due to your negligence, this coverage will kick in.
Product Liability Insurance
Product liability insurance is useful if you’re a home based business generating income by selling items. Invest on this liability insurance if you’re a:
So what does this insurance do? Product liability insurance will cover costs if a client files a claim because you sold a defective product, which caused injuries and property damage. Just like professional liability insurance and general liability insurance, product liability insurance will take care of defense costs, settlements, and other legal expenses.
