Sarah Twomey | Desjardins Group
According to Industry Canada, there are one million small businesses across Canada that make up about a quarter of the country’s total GDP. And among those numbers are small business owners who operate out of their homes. It’s hard not to envy this independent lot, who are their own bosses meeting their own deadlines all while remaining in their PJ’s.
The reality is that it takes a lot of discipline and hard work to run a successful home-based business. It can also cost a fair bit to set the business up. There’s computer and other equipment costs, space for an office in your home, office furniture, supplies, and so on. The one important expense that many home-based business owners forget is insurance coverage. In fact, according to study by the Insurance Bureau of Canada, almost 40 per cent of Canadians who operate a home-based business are not adequately insured.
“Some people assume that their home insurance will also cover their home-based business,” says Lisa Balliram, a senior underwriter with Desjardins Insurance. “This is not true. If you are running a business out of your home, you need to inform your insurance company to ensure you are properly protected.” As a matter of fact, not disclosing a home-based business to your insurer could result in a policy being voided, leaving the home-owner completely unprotected.
Even if the insurer decides not to void the policy, the business owner could be at risk that they won’t be fully covered in the event of a loss, says Balliram. That’s because home insurance policies typically have low coverage limits for equipment, tools and the instruments necessary for a business or professional service. Here are a few examples of what could go wrong:
Slip and fall injury:
If you frequently held meetings at your home with clients and business partners, and one was injured due to slipping down stairs anywhere on your property, they could decide to sue you for damages.
Fire resulting in lost goods:
Let’s imagine that you use an expensive computer system for your business. If you had a fire in your home and that equipment was destroyed, your home insurance may not cover the loss. You could be looking at thousands of dollars that you would have to pay out of pocket.
In case of a break-in:
Similar to the scenario above, if someone breaks into your house and steals or damages your office computers and other equipment, you may not be fully covered under your home insurance policy. Likewise, if someone stole your business computer or tablet from your car, you wouldn’t be covered under a home policy. In both cases, the replacement costs could be very expensive.
From these three examples alone it’s easy to see that having that right insurance to protect your business is essential.