In today's world, more people are working from home and starting businesses out of their homes. In fact, there are currently more than 38 million home-based businesses in the US. But having a home-based business means a gray area for insurance coverage and understanding whether your homeowners insurance is enough or if you need to invest in an Illinois business insurance policy to be properly protected.

Not every home-based business needs insurance, but for those that do, an Illinois independent insurance agent knows what is required and the best place to get it. They can protect you from potential risks and make sure your business is following all state requirements. Here's why your home-based business might need business insurance coverage. 

What Is Home-Based Business Insurance?

Whether you own a business or are working remotely from your home, chances are you have a variety of equipment that is specifically used for business purposes only. Home business insurance is a type of business insurance policy that is designed to protect your specific business assets that may be excluded from your homeowners policy. This typically includes technology, files, and office equipment.

Important stats about small businesses in Illinois

• 99.9% of Illinois businesses are considered small businesses
• Illinois is home to 1.2 million small businesses
• 2.5 million people in Illinois are employed by small businesses
• The number of proprietors in Illinois increased by 3.5% from 2017 to 2018
• The median income for self–employed individuals at their own incorporated businesses was $52,990 in 2018

What Does Home Business Insurance Cover in Illinois?

Business insurance for your home can cover many things, but it's most beneficial for covering potential liability claims that could be made against you or your business and protecting your business assets. There are two types of liability coverages that you may benefit from if you work from home.

• General liability insurance:  Pays for any third-party injuries that take place on your property. This includes medical bills and legal fees. If you're a gym instructor and you teach classes out of your home, you would need general liability insurance if a customer slips and falls while walking into your home to attend a class. 
• Professional liability insurance: Protects you financially from legal claims and lawsuits if you make a mistake and advise or treat someone incorrectly. 

Home insurance will also cover your business-related assets through a business owners policy. This insurance will pay for things like structures on your property that your business may use, damage to inventory, and loss of income if your home is damaged by severe weather or a fire. 

What Doesn't Home Business Insurance Cover in Illinois?

We'd love to think that there is insurance for all situations, but even a home business insurance policy won't cover every event. In particular, business insurance won't cover the following:

More important than what business insurance won't cover is understanding what is excluded for home businesses in your homeowners policy. Home-based Illinois business owners will not receive coverage for data loss, business records, lost income if the home is damaged, and injured employees. That's why it's important to work with your independent agent and determine what your homeowners insurance will cover and what additional coverages need to be added on through a business insurance policy.

Do Home-Based Businesses Need Insurance?

In short, yes. Unless you're running a one-man show that has very minimal risk, most home-based businesses can benefit from business insurance. The main reason is that your homeowners policy is only designed to protect you to a certain point and is more based on protecting your home, not your business operations.

A homeowners policy will not pay on any liability claims if they're made against your business. It also won't cover your inventory or property.  Without any coverage, even the smallest claim can result in big financial damage to your business. 

Does Illinois Homeowners Insurance Cover Home Business?

Your Illinois homeowners insurance will cover your home-based business to some extent. It will provide limited coverage for property and liability, but will exclude the things we previously mentioned, including:

• Data loss
• Business records
• Lost income if the home is damaged
• Injured employees

Depending on the type of business you run, you may not have enough coverage to protect all of your business assets with just your homeowners policy. According to insurance expert Paul Martin, endorsements are a great way to enhance your homeowners policy for business. "You can add endorsements to your existing home policy that will cover your business equipment and other assets," says Martin. "Or you can choose to purchase coverage individually based on your needs. Businesses have many options when it comes to finding the right coverage." 

Why Use an Illinois Independent Agent?

Any business needs to consider business insurance no matter where it is located.  Working out of your home is convenient and can save you money in renting or owning office space, but still leaves you exposed to potential risks. 

An Illinois independent agent is an expert in both business insurance and homeowners insurance. They can review your policy and help you understand what coverages it offers your home-based business and where you may need to add on. They'll then shop multiple carriers to pull several quotes so you can get the most affordable home business insurance available. They make shopping for insurance convenient and will help you protect your business.