Home Based Business

As people are looking for ways to save money and find a greater sense of work-life balance, Home Based Businesses are becoming more and more popular. Especially during this time, when more people are working from home or changing how they work.

Working from home can be appealing for a number of reasons, including:

• No commuting
• More cost-effective than renting/leasing office space
• Reduces or eliminates the need for child care
• Tax deductions (including a portion of your property taxes, utilities, repair and maintenance, property insurance, and mortgage interest)

There are a wide range of Home Based Businesses, including popular network marketing companies such as Young Living, Monat, and Tupperware.  Many professionals choose to work from their home, including accountants, realtors, mortgage brokers, and even insurance brokers.  We also commonly see other services such as massage, chiropractic, and estheticians in addition to web designers, party planners and caterers.  There are also higher-risk businesses such as word working and carpentry.  Perhaps one of the most common Home Based Businesses that we come across are day homes.

If you are planning on running a business from your home, we highly recommend that you contact your insurance broker to find out how it may impact your property insurance policy and coverage.  It is important to note that the liability coverage on your property insurance policy does not extend to anything related to your business. For example, if a client or a courier came to your home for business purposes and injured themselves, there would be NO coverage in place under your home policy.  Property insurance policies will not extend coverage to your business contents or liability, and therefore a separate Home Based Business endorsement or a separate commercial insurance policy may be required.

A Home Based Business (HBB) endorsement can often be added to a homeowner’s, tenant or condominium policy.  Most of the HBB endorsements have the following requirements:

• The business is operated out of the insured’s home
• The business is operated by up to two people
• The business occupies less than 50% of the home
• The business has gross receipts no greater than $75,000 per year
• The business has Canadian operations only

Depending on the type of the business, or if does not fit the above criteria, then it would be insured through a separate commercial policy.

The HBB endorsement will provide the following types of coverage:

• Business property on premises
• Business property off premises
• Accounts receivable
• Valuable papers
• Money
• Credit/bank cards
• Extra expense
• Business interruption
• Liability (personal liability, advertising injury, product and completed operations, and off premises)

A HBB endorsement usually classifies eligible businesses into three categories, including Office and Office Services, Sales, and Crafts and Other and typically costs between $200 – $300 per year.

If you have any questions regarding the above information or to ensure that your property and Home Based Business are adequately insured, please contact our Office and one of our knowledgeable Brokers would be more than happy to assist you.

Thank you,

The Costen Insurance Team