The number of people who work from home has grown significantly over the last 10-15 years, coinciding with a rise in self-employment and entrepreneurship. According to Statistics Canada's 2011 Labour Force Survey, self-employed workers in the first quarter of 2011 totaled 2,656,800.
For those that choose the freedom and flexibility of a home-based business, it's important to remember that you face the same risks as any business. While your homeowner's insurance may offer some protection for a home-based business, here are five reasons why additional coverage may be necessary:
You Have Expensive Equipment
Every business relies on equipment of some type. Whether it is computer systems or a sewing machine, the loss of vital equipment can spell the end of a home-based business. Homeowners insurance policies often limit or exclude coverage for business property kept in the home, so additional coverage is necessary to protect the loss of equipment, as well as inventory.
Clients Visit You In Your Home
If your home-based business has clients or customers visiting, liability insurance is a must. If someone were to be injured on the premises, you will be held responsible. This means that something as common as slipping and falling on a wet step can result in major financial damage from lawsuits or medical expenses. Liability insurance will also protect against accidents involving employees or delivery people.
Damage To Your Home Could Cause You To Lose Business
With a home business, problems on the property can spill over and affect your work. A house fire or flood damage may have a catastrophic impact on your business. In these cases, business interruption coverage is essential to help keep your home-based business afloat. Whether you need to temporarily move your business to another location or simply stay financially solvent, business interruption insurance covers damage from something as serious as a fire to something simple like renovations.
You Use Your Car For Business
Just as your home must be properly insured to conduct business, auto coverage must also be considered if you are using your personal vehicles for business purposes. A non-owned automobile liability policy will protect a business's finances in the case of an accident.
You Employ People
As your home-based business grows, it may take on employees. This changes insurance needs drastically, as things like life insurance and business-vehicle insurance are not covered by homeowners insurance. If your home-based business grows and expands, it's vital to make sure your insurance keeps pace.
Home-based business owners should contact a HUB International specialist to explore their options and determine exactly what kind of insurance they need to ensure their business is protected.