Home Based Business Insurance: All You Need To Know
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Discover the methodologyOperating a business from your home offers many advantages, but it also comes with unique risks. Standard homeowner's insurance often doesn't cover business-related incidents, leaving your home-based enterprise vulnerable.
Home business insurance bridges this gap, providing crucial protection for your business equipment, liability and more. But why is it essential? And what does it cover? What does it cost? We've got all the answers.
Find everything you need to know about home based business insurance in Canada in this complete guide. You can also use our free tool to compare personalized quotes for insurance for home based businesses from top companies in the country.
Home Business Insurance Canada: Key Takeaways
- Insurance for home based business typically covers business property, liability, loss of income.
- Fills the coverage gaps left by standard homeowner's policies.
- Policies can be tailored to meet the specific needs of your home-based business.
- Adding a business endorsement to your home insurance can cost $100-$600/yr.
- Comprehensive standalone policies start at around $750 per year.
- Businesses with higher risks or claims history may face higher premiums.
What is home business insurance?
Home based business insurance is a specific type of coverage designed for businesses that operate out of a residence. It protects business owners from financial losses due to various unforeseen circumstances.
Here are some reasons why this type of insurance is important in Canada, even though you're operating out of your residence:
- Limited coverage in standard home insurance policies
Standard homeowner's insurance policies in Canada typically exclude coverage for business activities. So, if your computer stops working due to a power surge and it's essential for your company, your home insurance likely won't cover it. Home-based business insurance bridges this gap.
Lawsuits are a possibility in any business. Even a minor accident involving a client at your home office could lead to expensive legal fees. Home-based business insurance provides general liability coverage to protect your assets from such claims.
- Sole proprietor protection
Many home-based businesses in Canada are run by sole proprietors. This means there's no legal distinction between your business and your finances. If someone sues your business and wins, they could potentially go after your personal belongings like your car or house. Home-based business insurance acts as a shield, separating your business and personal finances.
Make sure to compare all your options before you make a decision. Our comparator can help you with that — just fill in some basic details on your business and start comparing.
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What does home based business insurance cover?
Home business insurance coverage in Canada can vary depending on the specific policy and provider, but there are some common types of coverage:
- General liability coverage
This is crucial coverage as it protects you from lawsuits from clients, customers, or even people passing by your home if they are injured or their property is damaged due to your business activities. An example could be a client tripping over a cord in your home office and getting hurt.
- Business personal property coverage
It covers damage or theft of your business equipment and supplies located at your home. This could include computers, printers, inventory, furniture specifically used for business purposes, etc.
If your home becomes unusable due to a covered event (fire, flood, etc.) and your business is interrupted, this insurance helps recover some of the lost income and certain ongoing expenses while you get back on your feet.
Here are some additional coverages you might consider depending on your business needs:
- Cyber liability insurance: Protects your business from financial losses due to data breaches or cyberattacks, which are increasingly common.
- Professional liability insurance (errors and omissions): Covers you if a client sues you for failing to perform a service as promised or for making mistakes in your work.
- Commercial auto insurance: If you use your vehicle for business purposes (deliveries, meetings, etc.), you'll likely need commercial auto insurance to cover business-related accidents, as standard auto insurance may not provide sufficient coverage.
How to insure your home-based business?
There are two main ways to insure your home-based business in Canada:
- Adding a business endorsement to your homeowner's insurance policy: This is often the most affordable option, but it may not provide enough coverage for all businesses. Be sure to speak to your insurance provider about what is and is not covered under an endorsement.
Pros
- Often the most affordable option
- May be sufficient for low-risk businesses
Cons
- May not provide enough coverage for all businesses
- May not cover business interruption
- May not cover liability for business errors and omissions
- Purchasing a standalone home business insurance policy: It will provide more comprehensive coverage, including general liability coverage, business property coverage and business interruption insurance.
Pros of insurance for home based business
- Provides more comprehensive coverage
- Can be tailored to your specific business needs
Cons of insurance for home based business
- More expensive than a homeowner's insurance endorsement
Expert advice
Get quotes from multiple insurance providers and be honest with your insurance provider about the nature of your business and the risks involved.
What are home business insurance endorsements?
A home business endorsement, also known as an in-home business endorsement, is an add-on to your existing homeowner's insurance policy that extends some coverage to your business operations within your residence.
It's generally a more affordable option than a standalone home business insurance policy, but it provides less comprehensive coverage, including:
- General liability insurance
- Business personal property insurance
- Limited business income coverage
How much does home business insurance cost?
The cost can vary depending on several factors that can affect the premium. These factors include:
- Annual revenue: This is a major factor. Policies for businesses with higher revenue will generally cost more.
- Industry and profession: Higher-risk industries (e.g., manufacturing certain products) or those with professional regulations might have higher premiums.
- Services and products offered: The type of business you run can influence the cost. For instance, a bakery might have different insurance needs than a web design business.
- Coverage options: The specific coverages you choose (general liability, property, etc.) and the level of coverage (higher limits typically cost more) will affect the premium.
- Claims history: If you have a history of insurance claims, your premium might be higher.
For example
That said, here’s what you can expect to pay:
- Basic home business endorsement: $100 to $600 per year
- Standalone home business insurance: $750 and upwards per year
These are just starting points. To get an accurate idea of the cost, use our comparator to get quotes from multiple insurance providers. You can get multiple quotes based on your unique business needs.
Better protection for your business today
How can you qualify for home based business insurance?
Qualifying for this type of insurance in Canada involves meeting certain criteria set by insurance providers.
Here are some general requirements:
- Business type: Some businesses may be excluded, such as those with high-risk activities (manufacturing certain products) or those storing hazardous materials.
- Location: The business must be operated solely from your residence, and your home's primary function must be residential.
- Employees: Typically, home-based business insurance policies won't cover businesses with employees visiting the home office regularly. Some may allow one or two part-time employees.
- Revenue: Should not exceed $250,000
- Standard homeowner's insurance: Your current homeowner's policy should allow home-based businesses.
Additional factors (may vary by insurer):
- Inventory value: The value of business equipment and inventory stored at home might influence eligibility.
- Industry regulations: Certain professions might require additional coverage beyond a basic home-based business insurance policy.
Who offers cheap home business insurance?
Rates can vary depending on the specifics of your organization and your location, making it difficult to suggest cheap options. For instance, home business insurance Ontario policies might cost more than those in BC.
Good news: Some companies are generally known for being more affordable for home-based businesses and we have some recommendations.
Zensurance
Crafted for determined and fearless entrepreneurs, Zensurance business insurance covers the most common risks you might face when operating from your house.
- Over 300,000 Canadian small business owners trust Zensurance
- You can save up to 35% on your insurance
- Get instant price and coverage in just a few clicks
Summit Insurance
Summit provides home-based insurance for a wide range of industries:
- Construction & realty: For developers, contractors, landlords, accommodations and more.
- Professional services: Coverage for lawyers, accountants, consultants, architects, engineers and the like.
- Tech & media: Insurance for IT companies, SaaS providers, fintech, proptech and more.
- Manufacturing: Including machinery and equipment, plastics, food & beverage, and wood products.
- Retail & wholesale: From e-commerce and coffee shops to large product wholesalers.
- Health & Wellness: Covers gyms, spas, medical clinics, nurse employment agencies, dentists and more.
Good to know
Some other options to consider:
- Co-operators: Generally known for being a good value for those operating their company from their residence, Co-operators offer online quotes and various coverage options.
- TruShield Insurance: This might be a good option depending on your location, as availability can vary by province.
- Intact Insurance: A large insurance provider in Canada, Intact offers several options for at-house business insurance with ease of customization.
What insurance do I need to run a business from home?
Running a company from home in Canada requires a few key types of insurance to protect against various risks. We touched base on each aspect — so we’ll quickly take a refresher.
- Property insurance and liability insurance
- Commercial general liability insurance
- Professional liability insurance (errors and omissions insurance)
- Product liability insurance
- Cyber liability insurance
- Business interruption insurance
- Commercial auto insurance
- Legal expense insurance
You might also need:
- Workers' compensation insurance: Required if you have employees, it covers medical expenses and lost wages for employees who are injured on the job.
- Contents insurance: Extends your house insurance to cover company equipment and inventory stored at your home.
Consulting with an insurance broker who specializes in small or home-based businesses in Canada can help you determine the exact coverage you need based on the specifics of your business. You can also use our comparator to compare your options.
Better protection for your business today
