Today, many Canadian entrepreneurs work from their homes. There are many advantages to this – lower overhead costs, convenience, and flexible hours to name a few. However, many of them are unaware that their business could be at risk because they don’t have the right insurance. If you have a home-based business, you may think that you’d be covered under your existing home insurance policy if something happens, but that is not the case.
What’s the Risk?
While most homeowners insurance policies cover some business equipment—computers, printers—what you own is likely worth more than your policy’s limits. Also, your homeowners liability insurance probably won’t cover any injuries that may occur to the employees or clients that you have on your premises. In fact, if you haven’t disclosed to your insurance provider that you have a home-based business, they may deny your claim.
This insurance covers anything beyond what your homeowners policy would for a business you operate out of your primary residence. Common coverages include personal business property, professional liability, business income, personal and advertising injury, loss of business data, crime, theft and auto coverage. Depending on the type of home-based business you have, not all coverages apply, and other coverage options may be available.
Based on your business needs and your level of risk, you have three basic coverage options to choose from:
1. Homeowners Policy Endorsement. This provides the least amount of coverage and, therefore, is not ideal for most home-based businesses (depending on the level of risk). While it may provide enough coverage for a freelance writer with one computer and no business foot traffic, it’s not enough if you employ others, have clients visiting your home, store client information vulnerable to cyberattacks, or own valuable business equipment and inventory.
2. In-home Business Policy. More comprehensive than a homeowners policy endorsement, in-home business coverage is a stand-alone policy that provides higher amounts of coverage for business equipment and liability.
3. Business Owners Policy, or BOP. A BOP bundles property and liability insurance into one policy. Created specifically for the small- to mid-size business, a BOP covers your business property and equipment, loss of income, extra expense and liability. It is the most comprehensive property and liability option.
We’re Here to Help
Properly insuring your home-based business is crucial to protecting both your business and your home. At Cowan, we understand the small business owner’s personal and business needs. We can help you tailor coverage that’s as unique as the products and services you provide. Contact us today to learn more about how we can help you protect what you have worked hard to grow.