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Do I need extra home insurance if I work from home?

Posted on Sept. 26, 2017

More and more Canadians are working from their home offices. According to CBC, about 3.6 million Canadians have the luxury of wandering down the hallway in their pyjamas to start their work days.

However, working from home comes with a caveat. Extra insurance is required. 

Most home-business owners have little or no coverage from their homeowner’s policy. If you have a business running out of your home, you will need a small business general liability policy for protection against business-related claims. A general liability policy is an excellent idea for any home-based business, especially a business that involves clients on the premises for business-related reasons.

For instance, if a friend or a cousin is injured on your property, the liability on your home insurance policy will cover you. However, if a client or someone else who is on your property for the purpose of conducting business with you is injured, your homeowner’s insurance will not cover it.

This is when a general liability policy covering your business will be your hero. You could lose your entire business and suffer personally as well should a lawsuit be brought against you if you have no business insurance. Whoa. Scary.

Home-based businesses are unique, differing from businesses run from office and retail space. Each comes with its own particular risks that should be considered when it comes to insurance coverage.

Some are brave and run a business from home with no insurance coverage. Let’s assume you run a business that sells children and women's clothing and accessories through home parties and exhibition halls and you don't have business insurance. What happens if a child were injured using one of your toys? You could be sued in a heartbeat for health-care costs. Additionally, if your merchandise were lost or stolen, you could be facing huge financial and personal losses. 

Other types of professionals need to consider professional liability insurance as well as an errors and omissions policy. For example, if you are a financial advisor working from home and you make an error on a legal form. The lawsuits after a mistake on a legal form have been on the up rise at an alarming rate. Errors & omissions insurance will protect you from such an error.

It is necessary to inform your home insurance company when you start running a home business and ensure your insurance company knows what type of business you are running. This will make life easier for both parties. For reasons I can't begin to fathom, some still go with no business insurance. Take heed: without business insurance, it could get ungodly expensive.

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