Small businesses come in all shapes and sizes with product and service offerings that are just as unique and diverse. You might be kitschy, traditional, or groundbreaking. In any case, small businesses need to make sure they have the right coverage. There are big differences between insuring a repair business with ten employees that has it’s own brick-and-mortar building compared to a home-based enterprise consisting of two employees. Understanding how to protect your business is crucial for keeping it safe and sound, no matter where you put your home base.

Starting a business is an exciting venture, but it comes with its own set of risks. Whether you’re opening a cozy retail shop on Main Street or running a home-based online business, insurance is absolutely critical.

Key Differences in Insurance Needs for Brick-and-Mortar and Home-Based Businesses

You may choose to run your business out of your home or find a location where you can be available for customers’ needs. However you choose to structure your business, you’ll want to make sure you are prepared with the insurance coverage you need so sneaky little surprises don’t come back to haunt you during difficult times or in the wake of an incident. Here are some things to think about.

• Protecting your customers: Brick-and-mortar stores typically have customers dropping in to their physical locations, which increases the need for general liability and product liability insurance. Home-based businesses, on the other hand, aren’t likely to conduct customer interactions on the premises and so liability insurance may not be needed.
• Covering your property:  While both types of businesses need property coverage to ensure all assets are protected, the amount and type of coverage will vary. A brick-and-mortar store is likely to house products and/or company equipment on premises, which should be covered to limit losses in the event of theft or damage. Home-based businesses may or may not need additional coverage to cover assets.
• Unexpected closures and illness: While no one likes to think about the down times, it’s important that you plan for the unexpected. Most importantly, you’ll want to make sure you have coverage if you are unable to operate for any reason.
• Employee needs: Brick-and-mortar stores are more likely to require employees to assist with business operations, whereas many home-based businesses are single-person enterprises. If you do have employees, you’ll want to ensure you have the appropriate worker’s compensation in the event that employees need coverage for medical expenses or lost wages. 
• Auto coverage: Often, brick-and-mortars will require the use of vehicles for delivery services, home visits, or managing supplies. Some home-based businesses may also require a vehicle for business purposes, but not always. If you use a vehicle as part of your business, make sure you have commercial auto coverage.
• Regulatory requirements: It should also be said that insurance requirements vary by industry and location. Depending on where you’re operating, a brick-and-mortar store may be subject to more stringent regulatory requirements, including mandatory insurance coverage. Home-based businesses often have more lenient requirements, but owners should still ensure they are compliant with industry-baed regulations.

Essential Brick-and-Mortar Store Insurance Needs

Regardless of whether you’re running a repair shop, lawn maintenance business, or a local grocery store, your brick-and-mortar store will require some essential insurance.

Property Insurance

For a brick-and-mortar store, property insurance is non-negotiable. Your location is the heart of your business and something you can’t afford to lose. Property insurance covers the physical location and the contents within. Key items include inventory, equipment, and furnishings. Property insurance protects your business from losses due to fire, theft, vandalism, and certain natural disasters. If you rent your space, you’ll still need to insure your inventory and equipment, and your landlord may require you to carry property insurance as part of your lease agreement.

Liability Insurance

If you’re like every other small business, you probably want to bring more customers into your brick-and-mortar stores. Remember that with more foot traffic comes an increased risk of accidents and injuries. General liability insurance covers bodily injury and property damage claims that may arise from incidents involving customers or third parties. This is one of the most critical types of insurance if you have a physical location because it can protect you from costly lawsuits.

Business Interruption Insurance

Shutting up shop isn’t always your fault. Family medical emergencies or unavoidable hazards may require that you close for the safety of yourself and others. If your store is forced to close temporarily due to a covered event, such as a fire or natural disaster, business interruption insurance can help cover lost income and ongoing expenses.

Product Liability Insurance

If your small business sells physical products, product liability insurance is a must. Maybe you’re selling handmade jewelry in an art district or you are a local convenience store. Whatever the case, you want to protect your business from claims related to injuries or damages caused by the products you sell. Even if you didn’t manufacture the products, you could still be held liable if something goes wrong so don’t skimp on this one.

Workers’ Compensation Insurance

If you have employees working in your store, workers’ compensation insurance is usually required by law. This coverage provides benefits to employees who are injured or become ill as a result of their job. It also protects your business from lawsuits related to workplace injuries. It’s an absolute must-have.

Essential Home-Based Business Insurance Needs

If you’re a home-based hustler, you have a few different insurance needs, including the following.

Home-Based Business Insurance

First, a certain amount of your business assets are likely to be covered by your homeowners policy, but it is often limited. To fill the gaps, you may need to purchase a home-based business insurance policy. This type of policy can be customized to cover business property, general liability, and even loss of income. It’s a more affordable option than traditional commercial insurance, but it provides the essential protection you need as a home-based entrepreneur.

Business Property Insurance

If you store inventory, equipment, or supplies at your home, business property insurance can prevent financial losses. This coverage protects your business assets from damage or loss due to fire, theft, and other covered events. Even if your inventory is small, it likely represents a significant investment and should be covered by your policy.

Professional Liability Insurance

Many home-based businesses offer services rather than products—hence why you operate out of your home. If you provide professional services, such as consulting, writing, or design, professional liability insurance (also known as errors and omissions insurance) is important. This coverage protects you from claims related to mistakes or negligence in the services you provide, not a situation anyone wants to find themselves having to navigate.

Cyber Liability Insurance

Home-based businesses that operate solely online or that store customer data electronically are becoming more and more commonplace. The internet is a wonderful opportunity for those looking to sell their wares. If this sounds like you, you should consider cyber liability insurance. This coverage protects your business from losses related to data breaches, cyberattacks, and other digital risks. Even as a single operator, you’ll want to ensure you’re doing everything you can to protect your customers’ data.

We want you to keep up the hustle and make sure you’re protected while you do it. If you’re unsure about how many policies or what type of coverage is right for you, contact your agent to learn more.