ARTICLE - so you Think Your Home Insurance Covers Your Business?


BY: CHEF SONIA, SUCCESS MANAGER AT THE CHEF ALLIANCE 
DATE: NOVEMBER 12 2019

WHO IS AT RISK?


Many of our members are home-based businesses - including

 - personal chefs, private chefs,

 - artisan bakers & cupcake/cake makers,

 - caterers,

 - small-batch gourmet juice producers,

 - meal-prep services,

 - meal-replacement companies,

 - specialty and international meal services

and many more.  

Most use their home address as their business address, although they don’t cook at home.​


But our members, who are all covered by liability insurance as a part of their membership, are only a fraction of the food-related businesses in Canada.  Many of these other businesses are putting their lives and hard-earned assets (including their homes and cars) at risk, without realizing it, because they don’t realize that they should have liability insurance coverage or don’t think they need it.  What they don’t think about is that in today’s highly litigious society, liability insurance is more important than ever before.



HOW ARE THEY AT RISK?


Many entrepreneurs believe that, since they run their business from home (although the cooking may not be done at home), they are covered by their home insurance.  The problem lies in the amount of the limit on loss of business property which could be as low as $1000.

Home insurance would also not cover any losses incurred away from home, such as at a client’s home or in a commercial kitchen, nor would it cover liability arising from business-related activities such as a claim of food poisoning.

Take a moment to consider some business risks for home-based businesses…
- Your computer, needed to communicate with clients, research your menus/recipes, conduct banking etc. could go missing or be damaged;
- Your phone, essential for communications, banking, and for safety when you’re on the road may get lost, stolen or you could lose your data;
- A client comes to your home to pick up prepared food or to meet to learn about your service and slips;
- You may store marketing materials or equipment at home, which may be lost if there was a break-in or fire…



WHAT CAN BE DONE TO MITIGATE RISKS?


Firstly, read your homeowners or tenant’s insurance policy, or ask your insurance agent about the restrictions on the policy related to business activities.  Next, do an assessment of the risks and vulnerabilities that your business is open to.  Our Success Managers are happy to discuss this with you.

Consider the following as a place to start:
- Do clients, suppliers or business-related visitors meet you at home?
- Would your business be affected if you had a fire or flood at home, forcing you to move out permanently/temporarily?
- What inventory, equipment or other business items are stored at home, and how would your business be affected if these were damaged or lost through theft or other circumstances?

There are a myriad of things that can be done to reduce your risks - after all prevention is better (and cheaper) than a cure.  Consider the following:
- Install smoke and carbon monoxide detectors, fire extinguishers, security systems/cameras around your home;
- Avoid overloading electrical circuits, install surge protectors where you use computers, back-up hardware or modems;
- Do regular back-ups of important documentation (there are many affordable cloud-based services, so that on-site back-ups are not required);
- Keep office equipment, including computers, printers and cell phones out of view from windows;
- Keep any important documentation off-site or in a fire-proof safe;
- Meet work-related visitors outside of your home, such as a coffee shop, a commercial kitchen that you rent etc.;
- Keep stairs, paths, driveways etc free of debris and ice, and keep them well-lit;
- Only accept work or orders that you know you are qualified for or can handle.



NEXT STEPS


Whether or not you cook at home (check your local health regulations and local by-laws as many municipalities do not permit this without inspections and permits) or in a client’s home or a commercial kitchen, as a food-related business, you need to protect your assets and those of your business.

Commercial General Liability insurance (CGL) is the best way to do this - it typically helps protect against bodily injury claims, property damage, expenses that could occur if there is a claim related to your business operations and much more.  Membership in The Chef Alliance is a cost-effective way to get this protection and get access to peer support, business tips and guidance.  Even the most careful or experienced of Chefs/ Cooks/ Business Owners need CGL - after all, it only takes one claim or loss to cause financial hardship or worse.


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