An Insurance Policy Check Can Help Home Businesses Make Sure They Are Covered | The Canadian News

When Ana María Moreno decided to leave her social work career to start a home business last year, she found herself faced with an overwhelming to-do list that included everything from logo design to marketing strategy to outreach. customer.

The Calgary woman, who runs her business from her own kitchen, making and selling empanadas and other traditional foods from her native Colombia, acknowledges that reviewing her insurance policy was the furthest thing from her mind.

“I did not think. I had all these people telling me that I need to advertise, I need a logo, I should work on a trademark. It was a lot, ”Mereno said. “I was busy cooking food. I definitely didn’t think of everything. “

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

Experts say that new business owners should be aware that the typical home insurance policy offers only a small limit of coverage for books, tools, and instruments necessary for a business or profession. But it’s easy for entrepreneurs to get so caught up in the daily demands of their new business that they don’t even think about insurance, said Patricia Sheridan, Toronto-based director of insurance brokerage Burns & Wilcox.

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

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

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

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But it’s worth phoning to ask, Sheridan said. The last thing any commercial operator wants is to find out too late that the homeowners policy does not allow their specific type of commercial activity on the premises.

“The implications are that if they don’t have any other coverage for their business and they think they’re only covered by the homeowners policy, the homeowners policy could cancel them if they found out,” Sheridan said. “Or if there is a claim, it may not be covered.”

Anne Marie Thomas, director of consumer and industry relations for the Insurance Canada Bureau, said the insurance needs of individual businesses vary widely.

“If a single person works to weave baby tucks, then the liability risk to the business is minimal. It’s you, some knitting needles and some wool, ”he said. “But if you have a business where customers come in and out of your home, that poses a higher liability risk for the insurance company.”

One scenario that should be considered by every home business operator includes the possibility of a customer falling and injuring themselves climbing the steps into the home. Another is the risk of being sued for a problem with a product or service provided by the company. Personal liability in a home insurance policy would not cover these situations, but commercial liability insurance does.

Some home-based entrepreneurs may also have thousands of dollars worth of products or inventory in their basement. It’s worth talking to your insurance company about that, Thomas said.

Any business that involves building or manufacturing something within the confines of a home could also present liability issues, Thomas added.

“To go to the extreme, if you’re building firecrackers in your house, that’s something an insurance company will probably say, ‘I don’t think so,'” he said.

Every business and every insurance policy is unique, so it’s important for new entrepreneurs to talk to their brokers and be upfront about their specific situation and needs.

Thomas recommends that home-based business operators contact their insurance representatives as soon as the business is started and that they stay in contact regularly as the business grows and evolves. Having a comprehensive risk management plan in place doesn’t have to be a complicated process and can provide the necessary peace of mind, he said.

“With insurance, it’s better to have it and not need it, than to need it and not have it,” he said.