Running a business from your home – Are you covered?

You’ve finally done it! You’ve quit the daily grind and kickstarted your dream job working from home. Or maybe you’ve started a side hustle to show off your skills and make a little extra cash. But will your home business be covered if something happens to your home? While your home insurance policy may cover small things like books, tools and other items, most don’t cover your home business, especially when it’s your main source of income.

But a single cookie-cutter package won’t work for everyone, since every home business is unique. An accountant with a few clients visiting here and there will have different needs from a basement-shop pet groomer who has furry friends and their owners coming and going seven days a week. It’s important to tailor your policy to fit your situation exactly. That’s why we’ve answered a few of the most common questions about home business coverage.

If I start a home business, do I need to let my insurer know?

Simply put, yes. Always let your insurer know if there are any changes to the way you use your home to ensure you’re fully protected! An insurer may deny a claim or even cancel a policy if there’s business use on your home policy where it’s not permitted. Before you start any kind of home-based business, call your insurance provider to find out what options are available to you.

Will my business property be covered if something happens?

Think of all the things you use to run your business. You’ve probably got a laptop or desktop computer, furniture and a cell phone. Home office basics alone can really add up. Regardless of the size of your business you should have separate coverage for your business property with a limit high enough to get you back to where you need to be. This is because your home policy probably won’t cover it. To find out what your current home policy does and doesn’t cover, call your provider and they’ll review your coverage with you.

In the business of making and selling? Make sure you have enough coverage to replace any inventory and equipment you’re storing in-home. If you travel with your stock, you’ll need coverage if it’s lost or stolen when you take it out of the house. Specialized equipment can be costly and sometimes hard to replace, so you’ll want to have enough insurance to cover that, too.

Will my home policy protect me if a client gets hurt on my property?

Typically, home policies won’t cover you for home business-related accidents or injuries. Say you run a hair salon out of your basement and a client trips down the stairs on their way in. Your home insurance won’t protect you from a resulting lawsuit in this case. But business liability will, as it pays for medical costs, and any legal costs to defend you if the person decides to sue. Of course, your best protection against lawsuits is to prevent them before they happen, so be sure to fix that broken step and clear the walkway before opening up shop!

Other protection you might want to consider:

  • Product liability. This one’s a must if you make, sell or supply products for a living. If any product causes injury or property damage, you’ll want to have this to take care of any lawsuits that could happen.
  • Professional liability. Also known as errors and omissions insurance, this covers liability for business mistakes and services provided that just don’t meet the mark. For example, if an accountant gives wrong information that causes a client to lose money, the client could sue. In a nutshell, if your job is to give professional advice, you definitely need this protection. Other business owners who should consider this coverage include lawyers, real estate agents, and even personal trainers, to name just a few.

How will I pay my bills if something happens and I can’t work from home?

A fire or another major disaster could be devastating for any homeowner. Getting back on your feet after a loss can take weeks, or even longer. And if you work from home, this means time and income lost from your business. Loss of business income protection will help keep you financially afloat while you’re repairing and preparing to re-open for business.

Did you know? This coverage is also known as business interruption insurance. It’s different from the loss of use coverage included in your home policy, which covers you for additional expenses – like eating out at restaurants or staying at a hotel – in the event of a loss. Your home policy will also probably include coverage for lost rental income if you have an extra unit in your home that you’re renting out.

I run a small daycare from my home. Is it covered under my home policy?

You might just be taking in the neighbour’s kids a few days a week, but no matter how small your home daycare is, if you’re getting paid it’s still a business. You’ll likely need to purchase a separate business policy since your home insurance probably doesn’t cover a home daycare. And with a gaggle of accident-prone tots galloping around the house, liability coverage is your best friend! You need to have enough coverage in case a child gets hurt in your home and you’re held responsible, among other things.

Tip: To avoid accidents before they happen, childproof your home and make sure your daycare follows local childcare laws and any specific rules your insurance company has for home daycares.

Does my car insurance cover business use?

Car insurance often falls through the cracks when a home business owner is setting up a business plan. Most auto policies offer limited business use, and some don’t offer it at all. By understanding what’s included in your personal auto policy, you’ll know if you can keep using your personal policy or if you need to get a commercial auto policy.

Big or small, new or well-known, every home business needs protection. If you don’t have home business coverage already, it’s time to give your current home insurance provider a call. Find out if they can add business coverage to your existing home policy, or if you need to look elsewhere. If your business is already covered, update your provider if anything changes. Either way, keep up the great work!

Protect your home and the things you love most.