How to Get Business Insurance for Home-Based Businesses

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1. Think about what risks your business faces
- Damage or theft of inventory that you stored in the garage.
- Lost or stolen laptops that result in data breaches or lost records.
- Sickness among employees who work in your home.
- House fires.
2. Figure out what policies and coverage amounts you need
Type of insurance | What it covers |
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Claims against your business for third-party bodily injury, property damage or personal and advertising injury. You may be able to add an endorsement to your homeowners policy rather than have to buy a separate policy. | |
Claims of mistakes, negligence, inadequate work, inaccuracies, misrepresentation or similar allegations. A business may need E&O insurance if it provides services to customers for a fee. | |
Damage to your home and the items in it as the result of natural disasters, fire, smoke or vandalism. An electrical fire, for example, destroying your home office would be covered under commercial property insurance. | |
Loss of income when your business is unable to operate due to a disaster. Business interruption insurance covers lost income if you close your home office due to the damage from an electrical fire. | |
Vehicles used for business. Your personal auto insurance may or may not have coverage for limited business use of your car. However, if you use your vehicle often for business, you’ll likely need a commercial policy. | |
Data breaches or software hacks. If hackers breach your computer system and steal your customers’ credit card information, for example, this insurance would cover the costs of notifying customers, setting up credit monitoring and investigating the attack. | |
Employee dishonesty coverage, also called a fidelity bond | Employee theft of money or property. Can be part of a larger commercial insurance policy. |
Employees who are injured or get sick at work. Most states require employers to get workers' comp insurance for employees. |
3. Decide how you want to shop
Contact providers directly
Pros:
- Quickly get a quote and buy a policy.
- Avoid dealing with a broker.
Cons:
- It may be time-consuming to contact multiple providers for quotes, especially if the providers don’t offer the same coverage.
- You may not get the same level of attention as you would from a broker or independent agent.
Use an online marketplace
Pros:
- You can still handle the buying process on your own without having to contact multiple insurers.
- Don't necessarily have to talk to a human if you don't want to.
Cons:
- Marketplaces partner with specific insurers, so you’ll get quotes only from those partner insurers.
- Marketplaces don’t underwrite insurance policies, and you might not be able to manage claims or other issues through their systems. In addition, the communication among you, the marketplace and the provider isn't always seamless.
Use a broker
Pros:
- A broker can help you determine what coverage you need.
- Work directly with a human for a personalized process.
- Saves you time by not having to contact providers yourself.
Cons:
- Because brokers typically work on commission, they might try to sell you things you don’t need.
- Not obligated to find you the lowest rates for your policies.
- Some brokers charge fees.
- Using a broker will likely take longer compared to an online marketplace or directly contacting providers.
4. Compare the providers
- Policy coverage: Find out exactly what the policy does and does not cover.
- Limits of liability: Understand how much of a loss the insurer will cover. Larger or riskier businesses may need a higher limit.
- Price: Know how much the policy will cost and what the deductible is. Understand whether the coverage and liability limits are the same for the policies you’re comparing.
- Reviews: The National Association of Insurance Commissioners website shows how many complaints people have filed against a company. Also, read ratings and reviews of each provider before purchasing a policy.
Read some of our reviews of popular business insurance companies: | ||
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