Running an online business offers flexibility, convenience, and lower overhead, but without the right home-based business insurance, it also comes with specific risks. Whether you’re a freelancer managing clients from your living room or a remote entrepreneur overseeing projects, insurance is essential to protect your venture from unforeseen challenges.
From liability issues to cyber threats, having the right coverage helps safeguard your business and provide peace of mind. With the variety of insurance policies available, choosing the right one can be overwhelming, but it’s crucial for protecting your operations and assets.
In this guide, we’ll break down the best insurance options for small, home-run ventures in 2024. These policies are tailored to meet the unique needs of freelancers, remote entrepreneurs, and online business owners.
Why Do Home-Run Small Businesses Need Insurance?
You might think that because your business is small or home-based, you don’t need insurance. But the reality is that small businesses are just as vulnerable to risks as larger ones. According to USA Today, there are over 33 million small businesses in the U.S., with nearly half of them operating from home. Whether you’re an accountant, artist, caterer, or freelance writer, insurance is a critical layer of protection against financial pitfalls.
A common misconception is that standard home insurance will cover business activities, but that’s rarely the case. Most homeowners’ policies exclude coverage for business-related risks, leaving you financially exposed to property damage, legal claims, or accidents tied to your work. That’s why having business-specific insurance is essential.
One of the most important types of coverage for businesses with employees is health insurance. Offering health coverage not only helps attract and retain top talent but also ensures the well-being of your team. With programs like the Affordable Care Act’s (ACA) Small Business Health Options Program (SHOP), businesses with fewer than 50 employees can access affordable plans tailored to their needs.
Types of Insurance Policies for Home-Run Small Businesses
As a remote entrepreneur, you need to protect your business with the right insurance coverage. Several types of policies are specifically designed to meet the unique needs of home-run ventures.
Let’s take a look at 8 of them:
1. General Liability Insurance
Coverage
General liability insurance is essential for any small business, including home-run ventures. It covers accidental injuries, property damage, and advertising injury claims, making it an ideal choice for small business insurance for freelancers and those offering professional services from home. For instance, if a client trips in your home office, this policy would cover their medical expenses and any resulting legal fees.
Cost
The cost of general liability insurance varies based on factors like business size, industry, and location. However, the average premium for general liability insurance is around $67 per month.
Benefits
This coverage is particularly valuable for remote entrepreneurs who often interact with clients or have visitors in their home office. It protects your business from potentially devastating financial losses and provides peace of mind, ensuring that you can focus on your work without worrying about what could go wrong.
Best for
Small businesses with frequent client interaction, such as freelancers, consultants, or those inviting clients to a home office (e.g., accountants, interior designers). Essential for businesses exposed to potential property damage or bodily injuries.
2. Business Owner’s Policy (BOP)
Coverage
A Business Owner’s Policy (BOP) combines general liability insurance with property insurance, offering comprehensive protection for small businesses. It covers third-party claims, property damage, and business interruption, making it a convenient and cost-effective option for home-run ventures.
Cost
On average, a BOP costs small businesses around $53 per month. Pricing varies depending on factors like the size of your business, claims history, and coverage limits.
Benefits
For online businesses, a BOP offers consolidated coverage that includes essential protections like liability and property damage. This combination of policies is often more affordable than purchasing individual coverages separately and provides an additional layer of protection for your business operations.
Best for
Remote businesses needing comprehensive coverage, including liability and property insurance. Ideal for small businesses like e-commerce, consultants, or contractors that need bundled coverage for operations, equipment, and customer interactions. For those in need of the best insurance for contractors, a BOP provides comprehensive protection.
3. Professional Liability Insurance (Errors & Omissions Insurance)
Coverage
If your business provides services or professional advice, professional liability insurance (also known as errors and omissions, or E&O insurance) is a must. This policy covers legal fees, settlements, and judgments if a client claims your advice or services caused them financial harm.
Cost
Small businesses can expect to pay around $59 per month for professional liability insurance, though this varies based on industry, location, and risk exposure.
Benefits
Freelancers and contractors often face unique risks related to the services they provide. Having E&O insurance ensures that if a client disputes the quality of your work, you’re covered financially. It’s particularly essential for service-based businesses like consultants, accountants, and designers.
Best for
Freelancers, consultants, and service-based businesses that provide advice, professional services, or creative work. This is critical for accountants, marketing agencies, designers, or any professional liable for errors, negligence, or missed deadlines.
4. Cyber Liability Insurance
Coverage
In today’s digital world, even home-based businesses are at risk of cyberattacks and data breaches. Cyber liability insurance helps cover the costs associated with these incidents, including data breach response, business interruption expenses, and legal fees.
Cost
The average cost for cyber liability insurance is about $140 per month. The actual premium depends on the sensitivity of the data you handle and the size of your business.
Benefits
For businesses handling sensitive customer data, this insurance offers critical protection against data breaches, cyberattacks, and other digital threats. Considering that the average cost of a data breach has risen to $4.45 million, cyber liability insurance can be a lifesaver for home-run ventures.
Best for
Businesses handling sensitive customer data or operating online, such as e-commerce, digital marketing agencies, or service providers. Ideal for businesses storing customer information like credit card data, or relying heavily on online systems.
5. Workers’ Compensation Insurance
Coverage
If you employ staff, even for a home-run business, workers’ compensation insurance is a legal requirement in most states. It covers medical bills, lost wages, and disability benefits for employees injured on the job.
Cost
Costs for workers’ compensation insurance can vary. For small businesses with less than $300,000 in payroll, the average is about $81 per month, though some policies start as low as $13 per month
Benefits
Even remote businesses need to protect employees. Workers’ compensation ensures that your staff is covered if they suffer a work-related injury, keeping your business compliant with state regulations and protecting against potential lawsuits.
Best for
Home-run businesses with employees, regardless of their physical workspace. This is particularly relevant for small businesses in industries like remote customer support, logistics, or tech startups with remote teams, to cover workplace injuries.
6. Commercial Auto Insurance
Coverage
If you use vehicles for business purposes—whether company-owned or personal vehicles—commercial auto insurance is essential. It covers damages from accidents, injuries, and property damage while using a vehicle for work-related activities.
Cost
The cost of commercial auto insurance varies depending on vehicle type and usage, but small businesses typically pay an average premium of $142 per month.
Benefits
If you or your employees drive for work purposes, this insurance is critical to protecting your business from liability in case of an accident. It ensures that both you and your vehicles are covered during business operations.
Best for
Small businesses or freelancers who regularly use vehicles for work purposes. Ideal for contractors, delivery services, or businesses with employees driving to client sites, such as event planners or tradespeople.
7. Umbrella Insurance
Coverage
Umbrella insurance provides an extra layer of protection when your other liability policies reach their limits. This coverage is ideal for home-based businesses that want to shield themselves from large financial losses due to lawsuits or accidents.
Cost
Small businesses typically pay around $40 per month for each $1 million in umbrella coverage. This cost increases with higher coverage limits.
Benefits
For entrepreneurs with significant assets or higher liability risks, umbrella insurance offers peace of mind and financial protection. It helps cover legal fees, settlements, and damages that go beyond the limits of your other insurance policies.
Best for
Home-run businesses with high liability risks or significant assets to protect. Entrepreneurs in industries with frequent client interaction or higher exposure to lawsuits, such as construction, consultancy, or event planning, would benefit from this extra layer of coverage.
8. Commercial Property Insurance
Coverage
Commercial property insurance covers physical assets like equipment, furniture, and inventory from risks such as fire, theft, or vandalism. This policy is crucial for businesses that rely on expensive property to operate.
Cost
The average cost for small businesses is around $63 per month, depending on the value of assets, location, and risk exposure.
Benefits
It provides financial protection against unforeseen events that could cause significant property damage, ensuring business continuity.
Best for
Businesses with substantial equipment or inventory, such as e-commerce stores or home-based operations with valuable assets.
How to Choose the Best Insurance for Your Home-Based Business
Choosing the right insurance for your online business starts by assessing your specific needs, size, and industry risks. For instance, if you frequently drive for work, commercial auto insurance should be a priority, while businesses handling sensitive data should focus on cyber liability insurance. Consulting an insurance agent or broker ensures you receive tailored coverage, and regularly reviewing your policies helps keep up with your growing business and evolving risks.
Here’s a breakdown of the insurance types discussed previously in the article to guide your decision-making process:Insurance Type Coverage Costs Benefits General Liability Covers property damage, bodily injury, and advertising claims $67/month Protects from lawsuits, legal fees, and medical expenses Business Owner’s Policy Bundles liability, property damage, and business interruption $53/month Comprehensive, affordable protection for small businesses Professional Liability Covers claims of negligence, errors, or omissions $59/month Protects service-based businesses from client disputes Cyber Liability Covers costs related to data breaches and cyberattacks $140/month Protects against digital threats and data loss Workers’ Compensation Covers medical expenses, lost wages, and disability benefits for employees $81/month Ensures compliance with state laws, protects employees Commercial Auto Covers damages and liabilities from vehicle use for business purposes $142/month Covers business vehicle-related accidents and liabilities Umbrella Insurance Provides extra liability coverage beyond the limits of other policies $40/month per $1M Extends coverage for high-risk industries and significant assets Commercial Property Covers physical assets from fire, theft, or vandalism $63/month Protects business assets and equipment
By reviewing these options, you can select the coverage that fits your business and minimizes risk.
Our Advice to You
If your home-based business deals with equipment or physical inventory, consider Commercial Property Insurance. This policy safeguards your assets from unexpected risks like theft or fire, allowing you to continue operations smoothly after any damage.
For businesses interacting with clients or customers, General Liability Insurance is key. It covers legal claims related to injuries or property damage on your premises.
Providing professional services or advice? You need Professional Liability Insurance to protect yourself against potential disputes and negligence claims.
If your business handles sensitive digital information, opt for Cyber Liability Insurance to protect against data breaches or cyberattacks.
Running a business with employees? Workers’ Compensation Insurance is essential to cover medical bills and lost wages if they get injured.
Drive for work purposes? Commercial Auto Insurance is critical for covering any vehicle-related incidents during business operations.
High-risk businesses or those with significant assets should add Umbrella Insurance for extra liability protection when your base policies reach their limits.Lastly, a Business Owner’s Policy (BOP) is perfect if you want a cost-effective package covering liability and property damage, offering a bundled solution.
Key Takeaways for Home-Run Small Business Owners
Choosing the right insurance coverage for your online business is not only a smart move, it’s essential for protecting your livelihood. From general liability insurance to cyber protection, each policy plays a vital role in safeguarding your venture against the unexpected. By ensuring you’re covered, you can mitigate financial risks and focus on growing your business with confidence.
It’s important to assess your business needs regularly as your operations evolve. Revisit your coverage annually to make sure it aligns with your current risks. Whether you’re just starting out or expanding, making informed decisions about insurance can prevent future headaches.
For those navigating the world of remote work and digital nomadism, explore additional insights on Digital Nomad Insurance and Health Insurance for Remote Workers on ThinkRemote. By staying informed and proactive, you can better protect your business and ensure it thrives in the digital age.
