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Home Business and Your Insurance

Liability is the greatest risk for home-based businesses. If you operate a sole proprietorship or small business from your home, be aware of, manage and mitigate your business risks. A separate business insurance policy for your home-based business can provide peace of mind.

​Will My Home Insurance Policy Cover My Home Business?​​​

A home insurance policy offers a small coverage limit for books, tools and instruments necessary for a business, profession or occupation. As such, if you operate a business from your home, you should inform your insurance representative and obtain additional coverage to mitigate the risk of a potential loss. Review your policy, speak with your insurance representative and be aware that limits on a home insurance policy may not be adequate for all of the equipment used by your business.​

Small Business Can Add Up to Big Risks

Liability is typically the greatest risk with a home business. Consider these scenarios:

  • What if a client falls while walking up the steps to your home?
  • What if you are sued because of problems with a product or service you provide?
  • If you run a daycare business in your home, do you have adequate coverage?

Personal liability on your home insurance policy does not cover such situations. Commercial liability insurance would cover most damages you may be ordered to pay and would pay the legal costs to defend you in a lawsuit. ​

3 Ways You Can Minimize Potential Losses​

Risk management strategies are not just for big businesses. The process gives a clear and structured approach to identifying and mitigating risks. It doesn’t need to be complicated. You can create a comprehensive risk management plan for your home business by answering questions such as:

  1. What can go wrong?
  2. What will you do to prevent the harm from occurring and to respond to the harm or loss?
  3. If something happens, how will you pay for it?

Work with your insurance representative to determine what kind of coverage you need to protect your business. Do this as prior to starting the business and keep in touch regularly with your representative as your business grows and evolves.​

Do I Need Errors and Omissions Insurance?

If you’re paid to give professional advice, you require professional liability or errors and omissions coverage. If you give a client advice that is wrong or fail to provide necessary advice and the client’s business suffers as a result, such insurance will generally cover the damages and legal defense costs. This is specific commercial coverage for professional liability and is not covered under a home insurance policy.

The RIBO licensed brokers and CSRs at DPM Insurance Group are always prepared to take whatever time you need to ensure you completely understand your insurance policies; or answer questions about potential new coverages you are considering.

Source: Insurance Bureau of Canada


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Phone: 519-627-1777

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