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The Best Insurance Options for Home-Based Businesses

May 24th, 2023 | 5 min read

By Daniel J. Middleton

If you live in Central New York and run a business from your home, you may have to pay for any problems that happen to clients or customers who come to your home or buy your products or services.

You’ll likely not get enough money from your home insurance if something bad happens to your business equipment or supplies. Your home insurance may not cover everything you need for your business.

This means you could face financial losses or legal liabilities if something goes wrong with your home-based business, such as a customer getting injured, a product malfunctioning, or a tool breaking.

We understand that running a home-based business can be as challenging as rewarding.

You’ve invested a lot of time, money, and energy into your business, and you want to protect it from unforeseen events.

That’s why we wrote this article, to help you find the best insurance coverage for your unique needs.

When we onboard new clients, one of the questions we ask is whether they operate a business from home. This information helps us identify potential insurance issues that may arise in the future.

Our extensive experience working with home-based business owners has enabled us to help them better protect themselves from unexpected surprises and disappointments.

You’ve made a smart decision to research the right policy for your home-based business. You know your business is unique and deserves the best protection possible, and you’re not willing to settle for a standard home insurance policy that may not cover your business needs or risks.

In this article, you’ll learn about two flexible and affordable options for obtaining adequate home-based business coverage to suit your situation:

  1. adding riders to your home insurance policy or
  2. buying a separate commercial insurance policy.

We’ll guide you through both options and answer common questions on this subject.

Is Your Home-Based Business Properly Insured?

Working from home is not a new phenomenon. Many people have been running their own businesses from their homes for a long time. If you’re one of them, you need to make sure your business is properly insured. Otherwise, you could face serious financial and legal risks.

Home insurance policies are not designed to cover your business activities or property. So if a customer slips and falls on your driveway during one of our customary CNY winters, you may have to pay their medical bills and legal fees. That’s not good for you or your customer.

But how can you get the right insurance protection for your home-based business?

Option 1: Adding a Rider to Your Home Policy

One option is to add riders to your home insurance policy. Riders are extra coverages that you can buy through your agent.

However, this option has some limitations. First, you have to be a sole proprietor, meaning you own and run the business by yourself.

You can’t be an LLC or a corporation. You can use a business name, like “The CNY Bike Doctor,” but it can’t be a separate legal entity.

Second, your insurance company may only allow certain types of businesses to add riders to their home insurance policy. Here are some common examples of home-based businesses that may qualify:

  • Accountant
  • Dog Grooming
  • Baker
  • Bicycle Repair
  • Child Daycare
  • Computer Programming
  • Dance studio
  • Dentist
  • Doctor
  • Appliance Repair
  • Engraving
  • Lawyer
  • Lawnmower Repair
  • Music Studio
  • Musical Instruction (Piano, Guitar, etc.)
  • Musical Instrument Repair
  • Photo Studio
  • Taxidermy
  • Tutoring

Not all insurance companies offer riders for all these businesses throughout Central New York. Some may only offer riders for a few of them. You have to check with your agent or insurer to see what they offer.

Another thing to keep in mind is that the amount of liability insurance you have for your business is the same as the amount you have on your home policy. Liability insurance pays for the damages you cause to others.

If you run a business from home, you may need more liability insurance than a typical homeowner. This is especially true if you have customers or clients coming to your home.

You also have to think about your business property. This includes things like tools, computers, instruments, and other equipment that you use for your business. Your standard home policy has limited or no coverage for these items. So you’ll want to add extra coverage for them.

Infographic-1_The-Best-Insurance-Options-for-Home-Based-BusinessesOption 2: Getting a Separate Commercial Insurance Policy

Adding riders to your home insurance policy can be a convenient and affordable way to insure your home-based business. But it may not be enough for some businesses or situations. You may need a separate commercial insurance policy instead.

A commercial insurance policy gives you more flexibility and coverage options for your business. However, it also costs more and has a separate deductible.

You should compare both options and see which works best for your business needs and budget.

Other Commercial Policies to Consider for Your Home-Based Business

Depending on the field you’re in and how you conduct business, your home or standard commercial policy may not cover everything you need. You may require additional coverage.

Let’s say you have employees. You’ll need to get workers compensation and short-term disability coverage. These coverages pay for the medical and income expenses of your employees if they get injured or sick because of their work.

Another example is professional liability coverage. This coverage pays for the legal costs and damages if you make a mistake or cause harm to your clients with your professional services. Some professions that may need this coverage are

  1. barbers,
  2. accountants, and
  3. groomers.

You can’t get professional liability coverage from your home policy or an endorsement, but you can with some commercial insurance policies. You can also add one on its own.

Running a business from home can be rewarding and challenging. You want to protect your business from any problems that may arise.

That’s why you need the right insurance coverage for your situation.

Obtain the Right Coverage for Your Home-Based Business

By following the advice in this article, you’ll be able to find the best insurance coverage for your home-based business. You’ll be able to save money, avoid legal troubles, and protect your assets, which will allow you to focus on growing your business and serving your customers.

The result is enjoying the rewards of running a business from home without worrying about the risks.

But overlooking the points made here, you may end up paying more for insurance than you need, or worse, not having enough coverage when needed. You may face lawsuits, claims, or losses that could ruin your business or finances.

However, you’re being proactive in attempting to find the best insurance solution for your situation, whether it’s adding riders to your home policy or buying a separate commercial policy.

Now you’re also aware of the additional coverage options that may benefit your business, such as workers compensation, short-term disability, or professional liability.

Acquiring the proper coverage will position you as a savvy business owner who values your success and peace of mind.

The risk of losing your business or assets due to an accident, a lawsuit, or a disaster is scary and stressful for any home-based business owner. You don’t want to work hard and then lose everything because of something you can’t control.

We completely understand the precarious position you’re in.

As an agency that specializes in this area, we can help you find the best solution for your home-based business.

We’ll find out what type of business you run. Do you cut hair or meet clients at your home? Do you teach piano or other musical instruments to students? Do you fix bikes or handle other people’s property?

No matter what you do, we’ll show you how to protect yourself and your business from losing important insurance coverage.

To cover your business activities or property adequately, get the coverage you deserve by clicking the Get a Quote button below. One of our insurance specialists will reach out to you to discuss your policy options.

If you’d like to learn more about properly insuring your entrepreneurial endeavor, read “Home-Based Businesses: Is Homeowners Insurance Enough?

Get a Quote

Daniel J. Middleton

Daniel is an accomplished content creator. He has been working in publishing for almost two decades. Horan Companies hired Daniel as its content manager in November 2022. The agency entrusted its messaging to him. Since then, Daniel has written insurance articles, service pages, PDF guides, and more. All in an effort to educate CNY readers. He's helping them understand the world of insurance so they can make informed decisions.