When Does A Freelancer Need Business Insurance?

Whether it's due to the competitive job market or the rise of entrepreneurial culture, many Canadians are turning to freelancing as an alternative to the conventional salaried job.

Even if you're only freelancing part-time or on the side, when you start using your home as an office you introduce potential new risks that require coverage outside of a standard home insurance policy. Luckily for most freelancers who operate independently, home-based business insurance is available as an add-on to your existing home or tenant's insurance policy.

What does home-based business insurance cover?

A quick chat with your property insurer can ensure that your home-based business insurance provides you with the coverage you need. Plans typically cover four main exposures, but because it's an add-on to your existing property insurance policy the coverage may come with limits:

  • Office equipment
  • Business inventory both on and off premise
  • Business interruption insurance, which protects you in the event an insured loss affects your home and thus your work space
  • Liability

Liability coverage is often one of the most important protections. If a client, customer or even a delivery person visits your home on matters related to your work and gets injured, a lawsuit could cost you a lot of money and even your business.

And, while home insurance would typically cover your personal belongings, as soon as they're used for business purposes they are considered business property. Notifying your property insurer of your home-based business will ensure your equipment is protected whether you're at a client's office, a coffee shop, or sitting on the couch.

When it's time to get standalone commercial insurance

There are occasions when, as a freelancer, you'll want to look to a more comprehensive business insurance policy over a simple add-on to your property insurance. For example, do you outsource work to other contractors? Or perhaps you have contractors work from your home occasionally? If so, you may need a more robust business insurance package that includes general liability and commercial property coverage.

Additionally, other business-related insurance coverage you may need may include:

Errors and Omissions Insurance

Freelancers who work as consultants and are paid to offer expertise and advice to clients will likely need errors and omissions insurance.

Errors and omissions insurance protects you in the event a professional error, omission or negligence on your part causes a client to experience a financial loss. This could come from something as simple as giving bad advice. As such, this type of insurance is recommended to freelancers who work as consultants. It may even be required for certain contracts.

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Commercial car insurance

Most freelancers likely don't require commercial auto insurance, but if you use your vehicle to transport anything related to your occupation, from materials to tools and equipment, it may be necessary. It's always best to check with your insurance provider to see if you need to add coverage to your personal vehicle if you are using it for business purposes.

Depending on your situation, you may be able to get coverage for your freelancing business through your existing provider, but it could be cheaper to get it through another insurance company altogether. It's always best to compare rates before adding any new kind of policy to ensure you're getting the best deal. After all, when you're a freelancer, every dollar counts.


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