Home-based business insurance: Which protection is right for you?
You’ve done the hard work of launching your small business from your home office or living room couch. You’ve built a livelihood that’s all yours—so the last thing you want is to find out it’s not protected!
Will your home insurance be enough, or do you need a separate policy for your home-based business? Navigating coverage options can be confusing, but the good news is there are tailor-made solutions available. Let’s go through which ones could be right for you.
The difference between working from home and running a home-based business
In recent years, working from home has become relatively common. But remote work isn’t the same as running a home-based business. Understanding this difference is the first step in figuring out what protections you need.
Remote workers: Working for a company from home
If you’re a remote worker, you work for an employer from your own home. Your employer typically sets your schedule, tasks and performance targets. As a part-time or full-time remote worker, you have the freedom to choose where you work, but you still usually have to follow company policies, undergo company training and be supervised by a company manager.
Home-based business owners: Running a business from home
As a home-based business owner, you run a business out of your own home and earn your own income, whether it’s your main job or a side hustle. Home-based businesses come in all different shapes and sizes. Your business can be set up as a sole proprietorship, incorporation or partnership. You could be a graphic designer, a consultant, a tutor, an artisan or a hairstylist who sees clients in your own home.
Home insurance: a good fit for remote workers
Now that we’ve got a clear picture of the difference between remote jobs and home-based businesses, let’s look at the coverage provided by home insurance.
Your home insurance includes personal liability coverage, which protects you if you’re found responsible for causing injury to someone or damaging their property. Standard coverage typically includes liability related to remote work; however, it won’t offer protection for other business activities.
Home insurance also includes personal property coverage. For business property like tools, equipment and other materials (laptops, printers, etc.), coverage is typically limited to a certain amount under a standard policy.
That means that home insurance may be enough if you work remotely, but as a home-based business owner, you might have some pretty significant gaps in coverage. If you’re just learning all this now for the first time—that’s OK! Now you’ll be better equipped to make an informed decision about what protections are best for your business.
Two ways to protect your home-based business
While home insurance may be sufficient for remote workers, it’s not the best option for home-based businesses. Home insurance may provide limited protection for some business equipment, but comes up short in the liability coverage department. Operating a home-based business generally requires additional insurance coverage tailored to your business activities, such as a business insurance add-on to your home insurance policy, or a separate business insurance policy altogether. Let’s take a look at the coverage offered by each of these options.
Option 1: A home insurance add-on for home-based business owners
Some insurers offer optional coverage for self-employed workers that can be added onto your existing home insurance. At Desjardins Insurance, that’s our Home-Based Business – Business Package Insurance and Business Liability Insurance.
This add-on can expand your coverage to include professional or commercial activities that take place in your home. In concrete terms, it covers your office equipment and accounts receivable, business interruption and extra expenses, dishonesty or forgery. It also covers business liability for bodily injury, property damage, personal injury and medical payments, not to mention coverage for tenant legal liability and employee benefits liability.
While Desjardins Insurance’s add-on is considered an all-risks protection, it’s worth noting that there are certain exclusions, namely professional liability (also known as errors and omissions insurance) and cybersecurity insurance, for some professions. Depending on the risks your business is exposed to, you may prefer to have a policy that includes these types of coverage. Contact Desjardins Insurance to learn more.
If this coverage sounds like a good fit, you may be able to add it on if you meet the following conditions:
- You have home insurance through Desjardins Insurance
- Your business is solely run out of your own home
- Your workspace doesn’t take up the majority of your living space
- You work in an eligible sector, such as:
- Education (daycare, voice or music teacher, etc.)
- Healthcare (massage therapist, dietitian, nutritionist, etc.)
- Standard services (photographer, hairstylist, etc.)
- Professional services (accountant, lawyer, engineer, etc.)
Find out if you’re eligible for this add-on by contacting Desjardins Insurance.
Option 2: Business insurance
Is your business outgrowing your home? Do you have employees? Does your line of work require higher coverage limits? If you answered yes to any of these questions, your home-based business might actually be better off with a dedicated business insurance policy.
Desjardins Insurance provides coverage for business owners in construction, professional services, beauty care, retail stores and wholesalers, real estate, condo corporations and more. Our business insurance offers distinct advantages over a home insurance add-on (option 1) for entrepreneurs who are on the go or rent a commercial space, as your coverage follows you outside your home. You can also set higher coverage limits and add optional coverage like cybersecurity and errors and omissions.
Which coverage is right for you?
Finding coverage that works for you depends on multiple factors, including what type of business you run, how you interact with your clients, how much your work equipment would cost to replace and what types and levels of risk you’re exposed to. To help you figure out what your business needs, we’ve put together two tables comparing the coverage offered by the three different insurance options described in this article.
Coverage summary, by business type
Depending on the size of your business and what sort of work you do, some of the coverage options may be better for you than others. Here’s a table summarizing your options based on what type of business you run.
| Your business | Home insurance | Home-based business insurance add-on | Business insurance |
| You work alone, don’t receive clients at home and have little equipment | Limited coverage (business property) | Covered | Covered (may be overinsured) |
| You work solely from your own home, in an eligible sector, and your workspace doesn’t take up the majority of your home | Limited coverage (business property) | May be covered | Covered (may be overinsured) |
| You’re growing your business (hiring employees, opening a storefront, etc.) or need higher coverage limits | Not covered, or coverage is insufficient (depending on the example) | Not covered, or coverage is insufficient (depending on the example) | Coverage available |
Note: This table is for informational purposes only. Actual coverage may vary and terms and conditions apply. Contact Desjardins Business Insurance to find the right coverage for your needs.
Coverage summary, by scenario
When choosing coverage, it can be helpful to ask yourself what would happen in specific scenarios. For example, what if a client got injured in your home or if your work equipment was stolen? What about if you gave a client the wrong advice and they ended up losing money and suing you? Review each scenario and think about whether it applies to your business and what might be covered.
| Scenario | Home insurance | Home-based business insurance add-on | Business insurance |
| Your work equipment is stolen (computer, materials) | Limited coverage | Covered, subject to policy limits | Covered |
| A client is injured in your home | Not covered | Covered | Covered |
| Your business suffers a loss of income following a covered loss | Not covered | Covered | Covered |
| Inventory for your online shop is damaged by an insured peril | Limited coverage | Covered | Covered |
| You design a product with a typo in it for a client, and they lose money and sue you (errors and omissions coverage required) | Not covered | Not covered | Coverage available |
| In your work, you handle client data and face cyber risks | Not covered | Not covered | Coverage available |
Note: This table is for informational purposes only. Actual coverage may vary and terms and conditions apply. Contact Desjardins Business Insurance to find the right coverage for your needs.
Key takeaways
Remote workers and home-based business owners have different insurance needs. While home insurance may offer enough protection for employees who work from home, if you run your own business out of your home office, you may need more. A home insurance add-on for home-based businesses could provide just the right amount of coverage for you, or you might be better off with a dedicated business insurance policy. The best way to find your ideal solution is to contact Desjardins Insurance today.
Home-based business insurance FAQ
No, home insurance does not cover home-based businesses. For example, coverage for your work equipment is usually limited and professional liability isn’t included. Since home insurance isn’t typically designed to cover income-generating activities, it’s a good idea to review your policy and contact Desjardins Insurance to make sure you’re getting the coverage you need.
Yes! If you see clients at home, your home insurance won’t cover any accidents that take place while you’re running your business. That means if a client slips and falls and decides to sue, you’re completely unprotected. However, some insurers offer the option to add business coverage to your home insurance if you’re self-employed and work from home. Here at Desjardins Insurance, that’s our Home-Based Business – Business Package Insurance and Business Liability Insurance.
Yes, you may be able to add home-based business coverage to your home insurance policy. This add-on to your existing home insurance coverage is considered an all-risks protection for home-based business owners. That being said, there are certain exclusions and limitations, which may require taking out a separate business insurance policy. It’s a good idea to contact Desjardins Insurance to find out if the home-based business add-on is right for you.
There are a few straightforward steps you can take to insure your home-based business with Desjardins:
- Step 1: Think about what type of work you do (your industry, whether you see clients, how much your equipment costs). Take a look at the comparison table above to weigh your options.
- Step 2: If you’re interested in the business insurance add-on, get a personalized home insurance assessment with Desjardins Insurance. For business insurance, contact Desjardins Business Insurance for answers to any questions you might have.
- Step 3: Choose the right coverage for you!
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Certain conditions, exclusions and limitations may apply.
The terms and conditions of the described coverages are set out in the insurance policy, which always prevails.
Business insurance is offered only in Quebec.
These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them.
We recommend using caution and consulting an expert for comprehensive, tailored advice.