Protecting your home business

If your business uses little or no equipment, and if you never visit clients or have them visiting you, you may not need any special insurance. Otherwise, the answer is an emphatic “Yes”. More and more Canadians are working for themselves, and this frequently involves setting up a home office. But the insurance issues surrounding a home office are not well understood. A small oversight could be devastating to your business, whether it’s a fledgling or established enterprise. Let’s look at this from a couple of perspectives: property and liability.


Your homeowners insurance will cover personal property used for business purposes, but up to an aggregate amount of only $2,000 or so. So depending on the nature of your business, and the equipment, tools, etc., used in the business, that may not go very far if you’re the victim of theft or damage. That’s only for equipment located at your residence. If you take equipment “on the road”, it is not covered at all under your homeowner’s policy. Consider buying a business policy.


A business policy will also protect you against liabilies associated with running your business, as this is not covered under your homeowners policy. Say a client comes to see you in your home office. Scaling the stairs to the second floor office he slips and ends up in the foyer. He’s injured, and decides to sue you. Your homeowners (or tenants) policy won’t protect you. A special home business policy will protect you. It would not only cover any damages awarded against you, up to the limits of the policy, but would also pay legal fees to defend you.

Your home business liability coverage will also protect you if you accidentally damage a client’s property. So, when you bump into a table in your client’s office, sending an antique crystal bowl crashing to the marble floor, you’ll be covered. Your homeowners policy wouldn’t cover you, unless of course it was a personal visit, not business.

While we’re at it, consider two more types of business-related coverage: “errors and omissions” insurance, which covers you should advice you give to your client be incomplete or inaccurate, and that person suffers financially as a result. Lastly, if you install or service something, or supply a product, you may also need “completed operations” coverage, an extension to your basic business policy. You’re then covered against injury or damage that occurs as a result of your work, after you have finished the job and left the client’s property.

So give careful thought to the nature of your business and the protection it requires. Don’t short-change yourself by skipping the appropriate coverage.