How to insure for the business use of your home
If you’re like many other Canadians, you most likely operate a business from your home. It may not be your full-time 9-to-5 job, it may only be a part-time job during the evenings and weekends, but it’s still an additional source of income.
If you’re a business owner – from a freelance writer to a caterer to a daycare manager – you may or may not know that your non-personal activities actually affect your home insurance coverage.
Why additional insurance for the business use of your home is important
Often, a standard renter’s or homeowner’s insurance policy does not cover business activities including you, clients, and visitors for business purposes as well as materials, goods and supplies.
If you have a garage full of pottery you intend to sell, and it’s damaged in a fire, your homeowner’s insurance probably won’t cover the replacement cost. That type of loss can be financially devastating to your business.
If you have employees working in your home it’s important to purchase additional insurance in case they’re injured on the job. Did you know that even though you’re the homeowner and you pay for homeowner’s insurance, you may not even be covered if you’re injured while performing business activities? It sounds crazy, but it’s true. This is why purchasing liability insurance for the business use of your home is such a smart idea.
Why it’s important to separate home from business insurance
The most important reason to purchase additional business insurance is because if you have a loss due to business related activities you most likely won’t be refunded under your standard insurance policy. Even if you don’t think you need insurance because there is little or no risk in your business activities, you still need separate insurance.
Entrepreneur.com says that all business owners, even those who don’t have inventory and work alone, need some type of business insurance if they work from home. "People do not realize that if the UPS guy comes to your door with a business package in his hand and slips and hurts himself, there is no coverage for that injury in their homeowner's policy," the article points out. Even if it’s just a basic rider to augment your coverage, it makes sense to plan for the business use of your home.
How to purchase additional insurance for the business use of your home
Depending on the size of your business operation, you can usually purchase additional insurance for the business use of your home as an extension of your standard homeowner’s or renter’s insurance policy.
If you run a larger home-based business, including a shop on your property or the need for additional employees, the insurance company may require you to purchase a stand-alone business insurance policy. This depends on the size of your operation, inventory, office equipment in the home, and the number of employees that work on premises.
It’s always best to consult with a licensed insurance agent before purchasing any type of insurance. You can get an idea of the coverage you need, as well as which type of insurance is right for you and your business.