Insurance Basics

If you want to run a business from your house

or condominium, your home insurance will be

affected. If you're planning a condominium-based

business, there are many issues to consider. John Deacon of

Deacon, Spears, Fedson & Montizambert specializes in

condominium law. He notes that the main concern is the

effect a business can have on the quality of life of other

condo residents.

"A lot of customer or client traffic that affects driveways

can be a problem for residents of a condominium," Deacon

observes. The homeowners in your neighbourhood may

not appreciate the increased foot and vehicle traffic.

Deacon also points out that the board of a condo-zoned

residential property may not like seeing its address

advertised as a commercial site.

Your condo's declaration might state that commercial

endeavours are not permitted. The declaration may also

state that residents are responsible for increases in insurance

if they are running a business from their suite.

George Wheeler, manager of the City of Toronto's

Enterprise Toronto, acknowledges that it is increasingly

common for people to run businesses from home. But

Wheeler cautions would-be home-based business owners

about zoning issues and suggests speaking with your local

bylaw office.

Ask your insurance broker about business premises and

contents insurance. Do not assume that your home

insurance covers your business, and confirm that your home

insurance is not negatively affected by any aspect of

your business.

Property insurance covers the building where

your business is located, the equipment on

your premises, your inventory, and other

assets owned by the business. Home-based

business owners should discuss the amount of

insurance they need and should ask how the home business

affects coverage. Your inventory's cost price can be replaced

but not the replacement value, according to John van

Bilsen, senior vice-president for commercial insurance at

Firstbrook, Cassie and Anderson Ltd. Your furniture,

fixtures, and equipment can be insured for their full replacement

value.

Van Bilsen also suggests getting valuable papers

insurance. This pays for the cost of replacing important

papers a business cannot do without. This is separate from

data and media insurance, which takes care of "computer

coverage, reproduction of programs, and licensing fees."

Van Bilsen recommends backing up all your inventory

information often and keeping those records in a secure

location such as a safety deposit box along with your as-are

purchase receipts and equipment registration numbers.

Theft insurance will cover money, stock, and

fixtures in the event of a break-in or robbery.

To ensure that there are no problems with

collecting on your claim, check ahead of time

that you have an up-to-date security system

installed by a certified and bonded professional. Credit insurance can protect a business owner against unforeseen

credit problems due to theft.

Liability insurance covers you in a negligence

claim. It pays the cost of damages if you end

up in court and protects you in case you are

accused of not fulfilling a contract. Van

Bilsen views commercial insurance as risk

management. His company advises that retail liability

insurance be at least $2,000,000.

Vehicle insurance is also important, which

regular home insurance may not cover if you

use your car for deliveries or client visits. It is

important to find out what circumstances

you are covered for.

Consider loss of income insurance and business interruption

insurance in case your business is affected by a fire or flood

that prevents you from deriving an income. Find out

exactly what will be insured in this situation and if there are

reimbursement limitations.

Life insurance is an additional option. It can help

your family with finances in the event of your

death and protect your business assets. It can also

be used to finance part of your retirement income.

Disability insurance is also something you should

speak to your insurance professional about.

Resources

Your best insurance is being well informed. Here are a few

related websites you may find helpful:

• Canada Business Government Services for Entrepeneurs
  www.cbsc.org

• Canada Business Government Services for Entrepeneurs

  Industry Canada

  www.ic.gc.ca

• Canada Business Government Services for Entrepeneurs

  Association of Workers' Compensation Boards of Canada

  www.awcbc.org

• Canada Business Government Services for Entrepeneurs

  Certified Management Accountants

  www.cma-canada.org

• Canada Business Government Services for Entrepeneurs

  Certified General Accountants

  www.cga-online.org

• Canada Business Government Services for Entrepeneurs

  Insurance Bureau of Canada

  www.ibc.ca

• Canada Business Government Services for Entrepeneurs

  Business Development Bank of Canada

  www.bdc.ca

• Canada Business Government Services for Entrepeneurs

  City of Toronto bylaw offices

  www.toronto.ca

• Enterprise Toronto

  www.enterprisetoronto.com