Thinking of starting your own business? You’re not alone: nearly three million Canadians are self-employed. But if you’re planning to set up headquarters in your home, be aware that your homeowners insurance may not adequately protect your business.
Typical homeowners policies provide somewhere between $2,500 and $3,000 of coverage. This usually will cover equipment, but it won't offer liability protection or cover you for lost data or income.
Do the necessary research to protect yourself and your home business, and address the type and amount of insurance coverage you’ll need in your business plan.
In general, home-based business owners have three basic options:
Homeowners policy endorsement
This is added to a homeowners policy to increase coverage on business equipment. There also may be the option to buy a homeowners liability endorsement for protection in the event that someone, such as a delivery person, is injured on your property.
In-home business policy
An in-home business policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. These policies, which also may be called in-home business endorsements, vary significantly depending on the insurer.
Business owners policy
Also called a BOP, this plan offers the most comprehensive coverage for small and mid-size businesses. It protects against many of the same things that in-home business policies do but offers even more coverage.
Other factors to consider when managing a home-based business include:
Re-evaluate your coverage as your business grows and your needs change.
Visit your zoning board to review restrictions that could affect your business.
Licences and permits
Find out which licences and permits you need to run your business legally.
Talk to a tax professional about tax laws for home-based businesses. Also research money-saving deductions for your business expenses.
Not sure if your home business is adequately protected? Talk to your Desjardins Agent to discuss the insurance needs of your home-based business.