Obtaining business insurance is an important step in protecting your business assets, customers and employees. Business insurance, particularly for home-based businesses is often overlooked. Your home insurance policy may not cover home-based business activities. In addition, operating a home-based business without informing your insurance company (in writing) and inquiring about additional insurance coverage may invalidate your policy. If you operate at a retail or office location, you make have insurance coverage in your monthly leasing fees, but you need to confirm the type and amount to ensure you have adequate coverage.
There a number of different types of insurance to consider when operating a business either in your home or at another location:
1. Contents insurance: All businesses should have some form of contents insurance. This type of insurance protects both your inventor y and other assets in the event of loss or damage. If you are operating the business out of your home, you should ensure that you have adequate coverage as most homeowner’s policies will have a limit on content coverage. In addition, business equipment may only be covered by the homeowner’s policy while it is on the premises. You want to ensure that your equipment, including laptop and other devices, are protected if you are providing services to clients at another location outside of your home.
2. General liability insurance: General liability insurance covers injuries to clients and employees while conducting business on premises or elsewhere. If you are operating your business out of your home, most homeowner policies will not cover injuries to clients visiting your home unless you purchase additional coverage.
3. Vehicle coverage: If you are using your vehicle for business purposes, you need to notify your auto insurance company and provide them with details and amount of business use including projected km usage. This is particularly important if clients may be accompanying you in your vehicle.
4. Product liability insurance: If you sell products this type of insurance will protect your business from liability resulting from the product’s non-performance.
5. Professional liability insurance: If you provide services, such as consulting, to your clients then you should consider some kind of professional liability insurance. If a client claims to have suffered damages in any way from either the services or advice that you provided, this type of insurance will protect your personal assets, pay for a defense if required, and ensure there is sufficient compensation for your client. Some industries provide both professional and malpractice insurance through industry associations and memberships.
6. Malpractice Insurance: Malpractice insurance can protect you for damages caused by treatment and/or therapy. This type of insurance is common for professionals providing health-related services, but can also apply to hairdressers, dog groomers, estheticians and any many others. Some industries provide both professional and malpractice insurance through industry associations and memberships.
7. Errors and omissions insurance: If your business involves providing any kind of professional advice, this type of insurance protects you in the event that he/she suffered damages because your advice was inadequate, inappropriate or incomplete. Errors and omissions insurance will cover your defense costs and any damages awarded. This type of insurance is common for consultants, architects, lawyers and accountants.
8. Business interruption insurance: This type of insurance protects you if you need to suspend your business operations for reasons including fire, flood or other disasters.
Insurance is an important component of operating a business and can also be a significant overhead cost. You can look for ways to reduce your insurance costs by:
- Prioritizing your insurance needs to make sure you have adequate coverage based on the type of business you are operating
- Look for insurance packages that bundle different types of insurance together
- Take advantage of group rates offered through a professional association or business organization such as your local Chamber of Commerce or University Alumni group
- Talk to your current insurance agent to determine if you can expand on your existing policy
- Shop around to obtain different quotes so that you can compare prices and rates
For additional information contact the Small Business Enterprise Centre or visit the Insurance Bureau of Canada at http://www.ibc.ca/en/index.asp.