What Type of Insurance Do I Need to Start an Online Retail Business from Home?

Planning to open an online retail business from the comfort of your own home? Then you’ll need to have the right insurance in place to ensure your new business venture is fully covered!

Here at Berry Insurance, our team works with clients to provide the right types of insurance to protect their home or business, but what coverage do you need if your home will be your place of work?

In this guide we will be covering the insurance you need to insure your home-based online retail business and what you should know before you open shop!

Table of contents: 

• Are home businesses covered by insurance?

• What business insurance do I need for a home online retail business?
• What is a permitted incidental occupancy endorsement?

Are home businesses covered by insurance?

Standard home insurance policies that cover your dwellings and belongings are not designed with businesses in mind, meaning any home-based business will only receive limited coverage on a home policy.

Homeowners insurance policies typically offer only $2,500 in business equipment coverage on-premises and $500 for off premises. Some carriers will offer additional endorsements if your business is deemed eligible for coverage, up to a maximum of $5,000 or $10,000 in additional coverage.

Are home-based online retail businesses covered by insurance?

When looking to sell a product out of your home, whether it be hand-made crafts or resale items, you may not receive the full coverage necessary to keep your business afloat. Home businesses that involve maintaining a large stock of inventory at your home might not be covered for their full amount.

So while you may receive some coverage, you could potentially find a large portion of your inventory unprotected in the event of a claim.

If you are serious about your business and want to ensure you are fully protected, you would benefit from an endorsement to your home insurance policy that would add extra coverage for smaller operations. If you have big plans for your online retail business, you may instead require a business insurance policy.

What business insurance do I need for a home online retail business?

The easiest solution to protect your home-based online retail business is to purchase a business owners policy with bundled coverages for property and general liability insurance.

Property insurance:

While homeowners insurance will cover the actual structure of your home-based business, business property insurance helps to cover business related equipment and products stored within your home.

General liability

Since homeowners policies do not provide liability coverage for accidents or lawsuits related to your business, general liability would be necessary.

This would cover any costs arising from claims made against your business resulting from your operations, including property damage, physical injury, and personal injury like libel and slander.

Cyber insurance

Cyber insurance covers costs associated with a cyber attack or data breach. If your business is collecting client data or taking payments online, ensuring your business is secure can be crucial - especially with the prevalence of hacking, viruses, and phishing.

What is a permitted incidental occupancy endorsement?

This endorsement is available for homeowners policies and is a great option for coverage when you are a freelancer working out of your home.

Your insurance agent will determine if your home business venture can be considered a permitted incidental occupancy, allowing you to be eligible for the added limited liability and property coverages.

This option is best for home businesses with no foot traffic or clients/customers coming into your home, as well as those with smaller inventories of any product.

If the business is conducted in a detached structure on the property, such as a shed or detached garage, it will likely incur an additional charge. Some carriers may refuse to cover the business unless further endorsements are added.

Starting your online business

Selling products online from the comfort of your home can be a simple yet effective way to start your own business and hopefully make some extra cash!

But before you open shop, be sure to reach out to your insurance agent to see exactly how your new business will be covered and whether you’ll need to add endorsements on your policy or obtain business coverage.

Planning to expand operations? Then stay ahead of the curb as a business owner and read all about what you’ll need for a quote and how much you can expect to pay for business insurance.