Most Canadians are working from home now, and we’ve all read a half-dozen articles on tips on making the most of it.
But did Canadians forget to keep an eye on their home insurance policies?
It depends on the nature of your work and your employment status, but yes—there’s a possibility that your home insurance policy may need an update if you’re working from home
Employees Working From Home Are Probably Fine
While every home policy is different, it’s unlikely that working from home as an employee would change your home insurance rate. Jobs that actually can be done from home usually involve little more than laptops, inherently making them low-risk activities.
Working for an employer at a desk job doesn’t carry the same risk as running the business itself, so you wouldn’t need to worry about working from home as an employee in most cases. The business risk doesn’t correlate to risks related to your home in most cases.
It’s important to note that not every job just involves sitting at your desk—such as childcare, hair styling, or pet grooming—but it’s rare to perform those kinds of jobs from home as an employee. People performing those roles from home are usually self-employed, which requires a separate business insurance policy (we’ll get into that below).
If you’re working in marketing, finance, consulting, or computer software as an employee, then you’re probably in the clear.
Freelancers and Contractors Might Need Business Insurance
If you work as a freelancer (or have taken up freelancing this year) then it’s possible that your home insurance policy needs a change. However, it’s crucial to know that many insurance providers in Canada do have a small amount of coverage for small, low-risk businesses being run out of your home (usually about $5,000 in coverage—nothing fancy).
This would include side hustles such as:
- Graphic designers
- Social media managers
- Financial advisors
- Online instructors
- Project managers
- Web developers
- Virtual assistants
If you’re running a low-risk side business like that out of your home, then you can likely get by with the added home business coverage if it exists in your policy (always double-check that it’s there, though!).
That’s because most desk jobs are only likely to encounter liability risks—but those liabilities would be attached to your business instead of your home. The story could be different if you use physical tools and materials for your freelance business, though, like sculptors or carpenters.
It’s also worth noting that most home policies let you buy an add-on for home-based businesses that cover business tools and professional liability, but you’d still need a dedicated business insurance policy if clients visit your home or if the business hits a certain level of revenue. There are limits to the add-on policy.
Sole Proprietors: Home Policies Don’t Cover Your Business
Sole proprietors working from home are a bit more interesting because a home policy isn’t enough to service a dedicated business.
It’s not as simple as insuring your home, setting up business at home, and putting off insuring your business. Running certain kinds of businesses out of your home or anywhere on your property could introduce tangible risks to your home, not just legal liabilities.
That means your residential home policy could be affected by work in some form, including raising rates.
If you’ve taken up woodworking as a side hustle, for example, then there might be a set of new and very real risk to your home. In this example, those risks could include:
- Professional tools causing injury or damage to your home.
- Materials or chemicals causing property damage or personal injury.
- Clients could suffer injury on your property if they pick up products or travel to your home address.
That’s not an extensive list by any stretch, but it does demonstrate how bringing a workshop home—even just in your garage—can raise the level of risk beyond the capacity of a single home insurance policy to handle.
Always check with your insurer to be on the safe side. It’s not worth experiencing any curveballs when you need to make a claim.