Business Insurance for Home Tutors

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Business insurance is designed to protect a business owner's financial assets and is an essential investment for a home tutor.

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A HOME TUTOR

Example 1:  During a tutoring session, your dog runs off with the student’s computer bag, damaging all its contents.  Your general liability policy should cover the cost to repair or replace the devices.

Example 2:  During a severe storm, a student slips and falls in your entryway.  Even though you took every precaution, the family names your business in a lawsuit for their injuries. General liability insurance will cover legal representation and damages awarded in the lawsuit. 

Example 3:  While at a client’s home for a private tutoring session, your bag hits a painting, causing a large gash in the art piece.  Your general liability policy should cover the cost to replace the damaged art.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost of General Liability Insurance

On average, home tutors in America spend between $400 - $700 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner's policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Other Types of Coverage home tutors Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all home tutors should obtain:

Professional Liability Insurance 

If a customer does not feel you have delivered the quality of service agreed upon, they have a legal right to sue you for damages.  If a client decides to take legal action, even if there is no merit to their claim, your professional liability insurance will cover your legal costs, as well as any resulting payout.  

Home-Based Business Insurance

Since a homeowners policy excludes business property and business-related losses, it is important that those working out of their home purchase the proper coverage.  A home-based business insurance policy is there to protect you, ensuring seamless coverage.  

Business owners should check with their homeowners' insurance company to determine if an extension of coverage for additional premium is available.  If not, businesses can purchase home-based business insurance as part of a business owners policy (BOP).

Workers Compensation Insurance

If you decide to hire employees, the state will require you to purchase a workers compensation policy on your team.  This ensures coverage for lost wages and medical bills, should an employee get injured while on the job. If the injured employee decides to sue for additional damages, the insurance carrier would cover the cost of your legal fees.  

Workers compensation is generally purchased as a standalone policy.

Types of Coverage Some home tutors May Need

In addition to the policies outlined above, there are a few other types of coverage your home tutor may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Commercial Auto Insurance

While you operate out of your home, you will often find yourself traveling to clients’ homes for tutoring sessions.  Depending upon how often you use your vehicle for business purposes, it may be necessary to purchase a commercial auto policy.  

Businesses can purchase commercial auto insurance as part of a business owners’ policy (BOP) or as a standalone policy, depending upon the carrier.

Additional Steps to Protect Your Business

Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

Frequently Asked Questions

What is included in a business owner’s policy?

A typical business owner's policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company's needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it's best to be proactive when it comes to protecting your assets. After all, you can't buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.