A check on insurance policy can help home based businesses make sure they’re covered

Every business and every insurance policy is unique, and it's important for new entrepreneurs to talk to their brokers and be up-front about their specific situation and needs.

When Ana Maria Moreno decided to leave her career in social work to start a home-based business last year, she found herself facing a daunting to-do list that included everything from logo design to marketing strategy to customer outreach.

The Calgary woman — who runs her business out of her own kitchen, making and selling empanadas and other traditional foods from her native Colombia — acknowledges checking her insurance policy was the farthest thing from her mind.

“I didn’t think about it. I had all these people telling me I need to advertise, I need a logo, I should work on a trademark. It was a lot,” Mereno said. “I was just busy cooking food. I definitely didn’t think of everything.”

There are thousands of home-based businesses in Canada, running the gamut from hair salons to consulting firms to daycares — many run by first-time business owners.

Experts say new business owners should be aware that the typical home insurance policy offers only a small coverage limit for books, tools and instruments necessary for a business or profession. But it’s easy for entrepreneurs to get so caught up in the day-to-day demands of their new enterprise that they never even think about insurance, said Patricia Sheridan, Toronto-based director at insurance brokerage Burns & Wilcox.

“We see it a lot. I think a lot of the time it just does not occur to them,” Sheridan said.

Not every home-based business operator will require specialized insurance coverage. Depending on the type of business, home-based business operators may or may not require a separate business insurance policy or an extension to their existing homeowners’ policy.

But it’s worth a phone call to find ask, Sheridan said. The last thing any business operator wants is to find out too late that their homeowners’ policy doesn’t allow for their specific type of business activity on the premises.