Whether you have a shop on Etsy or you provide professional services, here’s what you need to know about insurance for your home based business.
Working from your home can provide so many great benefits – flexibility in schedules, being home with family, time with your four legged fur baby…. Whatever your reason for working from home, be informed about the risks and insurance for home based businesses.
Do home based businesses need insurance?
Yes, your home insurance policy does not provide coverage for a home based business, particularly commercial liability coverage.
Here at Westland Insurance, we have seen start ups of many new businesses which often begin their first iteration from home. Some are scalable to remain as in-home businesses while others evolve into entities that demand greater space and more employees, making it difficult to run from the confines of home. Whatever your scenario might be when considering a home based business, it’s important to know that your home insurance policy does not offer financial protection needed to cover off what could go wrong and cause financial setbacks.
According to the Insurance Bureau of Canada, the greatest risk for a home based business is liability expense. While a home insurance policy can cover up to a limited value for books, tools and instruments necessary for your business or occupation, this amount will not likely be enough for a home based business and there is no liability coverage provided beyond your personal liability.
Do I need insurance if my home based business is only part time?
Yes, whether you are launching out on your own on a full time basis or testing the waters to see if your life long passion has legs as a business opportunity, you have the same exposure to loss.
Think of what can happen in a home based business:
- A classic slip and fall, leaving your client unable to work because of broken bones
- Your product causes harm to someone
- An ingredient in your food product makes a group of people ill
What could possibly go wrong teaching ukulele lessons or selling gluten free nut bars from your home? A commercial liability policy will cover most damages you may have to pay for causing harm or damage, including legal costs to defend you in a lawsuit.
How can I control or reduce risks for my home based business?
Every business of every size needs to consider risk management strategies. This will help your business understand ways you can minimize your potential for loss. By asking three key questions, you are well on your way to creating a risk management strategy:
- What can go wrong?
- How can you prevent harm from occurring in the first place and respond if harm or loss does occur?
- If you are financially responsible for loss or harm, how will you pay for it?
Our team is here to help determine what you need today and work with you to make sure your coverage keeps pace as your business grows.
Additional Coverages you may need
If your business involves providing professional advice to your clients, you require professional liability or errors and omissions insurance. What if your advice falls short; perhaps you missed a key component to your client’s scenario. Professional liability insurance will cover the damages and costs of your legal defense. This coverage is never provided under your home insurance policy (which provides only personal liability coverage).
If there is a risk of third party liability claims for property damage or bodily injury (e.g., you have clients visiting your home or wish to operate a home daycare), then you will want to purchase General Liability insurance.
if you travel to meet potential or existing clients, suppliers, or pick up supplies or deliver home-made goods.
Your occupation and industry will dictate if you need other specific insurance. For example, you may require malpractice insurance if you are a massage therapist or chiropodist providing services from your home. For more information about these types of coverage you may need, speak to one of our expert advisors today.