Checking insurance policies can help home businesses make sure they’re covered

When Ana Maria Moreno decided to leave her social work career to start a home-based business last year, she found herself faced with a daunting to-do list that included everything from equipment to… Logo design to marketing strategy to reach customers.

The Calgary woman – who runs a business from her own kitchen, making and selling empanadas and other traditional dishes from her native Colombia – admits checking insurance is the furthest thing for her.

“I don’t think about it. All these people told me I needed advertising, I needed a logo, I should work with a brand. That’s a lot,” said Mereno. “I was just busy cooking. I certainly didn’t come up with everything.”

There are thousands of home-based businesses in Canada, ranging from hair salons to consulting firms to daycares – many run by first-time business owners.

New business owners should note, experts say, that a typical home insurance policy offers only a small coverage limit on books, tools and supplies needed for a business or profession. It’s so easy for entrepreneurs to get so caught up in the day-to-day demands of new business that they never even think about it, says Patricia Sheridan, director of Toronto-based insurance brokerage Burns & Wilcox. insurance.

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“We see it a lot. I think a lot of the time it just doesn’t happen to them,” Sheridan said.

“It’s usually not the first thing on people’s mind when they start a business.”

Not every home business operator will require specialized insurance. Depending on the type of business, home business operators may or may not require a separate business insurance policy or an extension to their existing homeowners policy.

But it’s worth calling to ask, Sheridan said. The last thing any business operator wants is to find out too late that their landlord policy doesn’t allow for their particular type of business on the premises.

“As a result, if they don’t have any other coverage for their business and they think they’re only covered under their homeowner’s policy, their homeowner’s policy may cancel them out if they find out. showed it,” Sheridan said. “Or if there’s a claim, they might not cover it.”

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Anne Marie Thomas, director of consumer and industry relations for Insurance Canada, says individual business insurance needs vary widely.

“If you are a one-man business that knits ao dai for babies, the risk of liability to the business is minimal. It’s you and some knitting needles and some wool,” she said. “But if you’re in business where you have customers coming in and out of your home, that’s a higher liability risk for the insurance company.”

One scenario every home business operator should consider includes the possibility of a client falling and being injured walking up the stairs to their home. Another is the risk of being sued because there is a problem with the product or service provided by the business. Personal liability in a home insurance policy will not cover these situations, but commercial liability insurance will.

Some entrepreneurs who work from home may also have thousands of dollars worth of products or inventory in their basement. Thomas says it’s worth talking to your insurance company.

Any business that involves building or manufacturing something within a home can also raise liability concerns, Thomas adds.

“To the extreme, if you’re building firecrackers in your home, that’s what an insurance company would probably say, ‘I don’t think so,'” she said.

Every business and every insurance policy is unique, so that’s why it’s important for new entrepreneurs to talk to their brokers and keep them informed in advance. their specific needs.

Thomas recommends that home-based business operators contact their insurance representative as soon as the business is established, and that they stay in regular contact as the business grows and develops. Having a comprehensive risk management plan in place is not a complicated process and can provide much-needed peace of mind.

“With insurance, it is better to have it and not need it, and then need it and not have it,” she said.