Does Having a Home-Based Business Affect My Insurance?

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Many individuals are discovering the benefits of working from home.  Home-based businesses offer owners the ability to shape their work life around their personal life goals.  However, many are leaving their home-based businesses unprotected.  A survey conducted by the Insurance Bureau of Canada found that 39% of Canadians who operate a home-based business do not have insurance coverage appropriate to this special need.

Some home-based business owners erroneously feel that as long as they have home insurance they are covered. However, while your homeowner’s policy protects your home and the risks related to normal activities in and around the home, it excludes coverage for buildings that are used in whole or in part for business purposes. Therefore, if you begin operating a business from you home, it’s important to inform your insurance company.

What Insurance Options Are There for My Home-Based Business?

The type of coverage that you require very much depends upon the type of business you are operating from your home. Basically there are two types of policies. One option is to obtain what is called an endorsement to your homeowner’s policy that is especially created for your home-based business.

A second option is to purchase a business insurance policy that is tailored to the precise nature and needs of your business, whether or not it is a home-based business. A business insurance policy provides the best coverage that will help ensure the longevity of your business.

What Types of Coverage Do I Require?

Although there are numerous types of business insurance, let’s consider two fundamental types of coverage that all businesses should have: 1) contents and/or property coverage, and 2) liability coverage.

Contents coverage protects you against the damage to or loss of any business-related equipment either in the home or if it is taken outside the home, such as to a client’s office. So, if your laptop computer was damaged or stolen while you are out making a sales call, an appropriate business policy would cover its loss. This would also be true of business materials such as products for sale, samples or other promotional items.

Your business insurance will also protect you against liability risks. For example, you hire a plumber to replace a sink in your home and he trips and breaks his leg. Your home insurance policy will cover the costs related to this trip-and-fall incident. If, however, a client meets you at your home, trips on the stairs and breaks his leg or is otherwise injured, without appropriate business liability insurance you could end up paying for his medical and other costs from your own pocket.

Even if you never have clients or employees come to your home, liability risks remain. You may be required to give a presentation to a prospective client in their boardroom. You plug the projector into a wall outlet and someone trips on your power cord, and breaks their arm. If sued, the court may decide that you are liable for the accident and are required to pay for the person’s medical costs and for their lost time from work. Business liability insurance protects you and your business against such claims.

Protect your home-based business so that you can go on enjoying the benefits and freedom that it affords.  Talk to us today about your business insurance needs. We’re here to help.

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