Why You Should Notify Your Insurer If You’re Self-Employed

A lot of people nowadays are choosing the “self-employed” life, and they have every right to be doing so. Being self-employed is tough, but it offers a lot of perks, like choosing your own hours, measuring success in the way that you want it to be measured, and managing your own “business.”

But, if you weren’t already aware, your insurance needs may shift if you use your personal items (such as your car, home and office, electronics, etc.) for business purposes. See, in a nutshell, home insurance and auto insurance are “personal lines” products, designed to protect your personal assets against common perils unrelated to business activities. If your needs change and you start using those assets for business purposes, well, your insurance may need to change to address that. And, if you fail to change your insurance and a loss occurs, you may find yourself without coverage.

Bottom line? Keeping your insurer in the loop on any changes you make that could impact your insurance is a good way to ensure your insurance remains current and that anything business-related which could lead to a claim would be covered.

Here are the details.

Liability risks for self-employed individuals

Being self-employed comes with responsibilities outside of insurance. There’s a lot of motivation required, a lot of discipline, and a lot of organization skills. Not everyone has what it takes to run their own business, much less turn it into a fruitful, long-term endeavour.

Meeting deadlines, finding clients, and keeping everything all under one roof – it’s seriously tough! And since it’s a business, it doesn’t come without its own unique set of risks.

Maybe you run an e-commerce website, as an example, and you deliver the products to various customers within your local area. When doing a delivery, you get into an accident with another vehicle, causing property damage and injuries. Your personal auto insurance may not cover you for this instance. Instead, you would need to have a commercial auto policy to be insured for the event.

Here’s another example: you work as a financial advisor, and you often have clients come to your home for therapy sessions. You offer advice to the client, and after having implemented your suggestions, they find your advice has led them to make a mistake and they sue you for their financial losses. Again, this wouldn’t be covered by your personal home policy. You would need a separate errors and omissions insurance policy to cover yourself.

A last example of a potential liability risk as a self-employed individual is if you were a personal trainer and you’d constructed a gym in your own garage. You have clients come to your home and workout in the garage, but after following your advice, one of the individuals working out with you gravely injures their knee. They sue you for their injuries due to your negligence.

All of these instances would not be covered by a standard home insurance policy, or even an auto insurance policy. Those policies are designed for personal usage, not for business activities, and you would need to equip yourself with a home-based business insurance endorsement or even a standalone commercial policy to have adequate coverage.

How to insure yourself as someone who is self-employed

There’s a solution for almost every situation with insurance. It is entirely possible to be self-employed and run a business out of your own home, without having to forgo insurance. Some situations may call for a simple addition to your personal policy, known as a home-based business endorsement. This is a possibility if you are self-employed but perhaps don’t use your car for business activities and don’t have clients come to your home, but utilize business equipment and technology to do work.

If you simply work from home on occasion or don’t deal with clients on any real level and maybe have a small setup with your personal laptop in your bedroom, you’re not likely to need any amendments to your personal policy. It’s still a good idea to keep your insurer in the loop though, as they’ll likely be able to inform you of what exposures you may have with your situation.

And finally, if you use your vehicle for deliveries, have clients visit your home daily, and have even made an entire home office, gym space, counselling space, or daycare area out of your home, then you’ll probably need a full commercial or business insurance policy.

What situations necessitate an insurance update?

Various “life” events may mean you’ll need to call your insurer to update them of any shifting coverage needs. Besides being self-employed, some examples of coverage-impacting events are as follows:

• Moving homes
• Home renovations
• New drivers
• A change in primary drivers
• Change of vehicle usage
• Short-term renting
• Long-term renting
• Home vacancy
• …and more

This is just a small list of a few situations where your insurance needs may change. For more examples, discuss with an Excalibur Defender today!

Talk to an Excalibur Defender

Ultimately, if you aren’t sure what you need, talking to your broker can make all the difference. It’s better to be safe than sorry when it comes to insurance, and insuring your assets when you’re self-employed can be a conundrum for many.

We’ve started to see a shift towards home-based business for many workers nowadays, whether that’s running a business entirely out of your own home where you’re the boss, or an employee shifting to remote-working and choosing to call their office “home base.” Both situations may call for an insurance update, so it’s always important to keep your insurer in the loop.

Give an Excalibur Defender a call today to talk insurance. We’re happy to learn about your situation and how we can protect you better, eliminating any potential blind spots and ensuring that the coverage you get is the plan that’s best for you. Get a quote or call us ASAP today.