Over 98 percent of Canadian businesses are small businesses according to Industry Canada, and nearly half of workers work from home according to Regus Canada, the shared office company.
You may operate a part-time business doing remote work at home for a few hours a week or have a full-time business making, packing and shipping products at your property. When risks due to injuries, losses, or customer complaints can arise, you have a responsibility to manage risk and protect yourself and business.
What kind of risks could affect a home based business?
If customers visit your home for any reason, they could slip and fall on an icy sidewalk. You may serve them coffee and they may suddenly develop an allergy to caffeine. Even the best-behaved dog may cause injuries under the right (or wrong) circumstances.
Managing risk is often about thinking about the "unthinkable" or the unforeseen. A Halifax tattoo artist gained internet immortality and probably had some regrets for misspelling a customer's chest-spanning tattoo. The customer sued. Although the courts found that the tattoo artist had no liability, she spent time in court fighting the lawsuit and got plenty of negative publicity.
Other risks to your business involve risks to yourself. What is your plan to keep your business going if you or a key employee becomes ill and can't work? How would you continue to pay bills if a fire or flood damaged your home?
And, no one likes to think about it, but not every person we may hire is perfectly reliable or trustworthy. How would you manage theft from your business supplies, products, or cash?
What does liability mean for a home based business?
Liability is a legal and insurance term that means financial and personal responsibility. If something goes wrong in your home-based business and you're sued and found to have liability, you will have to pay the judgement ordered by the court. Even if, like the Halifax tattoo artist, you're declared not liable, you will still suffer a loss of income and potential business setbacks. If you're a licensed tattoo artist following all recommended and required safety and legal guidelines, a home business insurance policy geared toward personal services businesses would pay for court costs and legal fees.
How can I manage risks for my home based business?
Risk management amounts to being knowledgeable, responsible, and using common sense. First, assess potential risks associated with your home business. Some risks are common to all home based businesses, like potential injuries on your property. Others are industry or profession-specific. A good home based business insurance policy will provide information on how to assess your home based business risks and recommend steps to reduce them.
What types of insurance should home based business operators consider?
Home and tenant insurance policies may be able to add additional coverage for micro home-based businesses with low risk. These policies may replace equipment or supplies -- as long as your policy covers it. If you conduct any professional or personal services, liability insurance, which provides coverage in case of lawsuits, is essential. Other forms of insurance for home based businesses include business interruption insurance, and commercial property insurance, which can insure inventory and equipment.
If you have a micro business a few hours a week working from home, you may be able to get insurance coverage to manage your risks through your home or tenant insurance. Your home based business may also benefit from commercial insurance for your property or to protect you in case of lawsuit liability. Find quotes with InsuranceHotline.com's comparison tool.