Posted by QuickReadAbout.com Staff in The home office is fairly commonplace these days as more people choose to work from home, either telecommuting or starting their own businesses.
Several things need to be considered when setting up a home office, not the least being how to insure it. If you are working at home under a telecommuting arrangement with your employer, the risk will be borne either wholly or partially by them. You will need to clarify exactly who is responsible for what before entering into the arrangement.
If starting a business from home, you are responsible for ensuring that the insurance coverage is adequate. Some different types of insurance for the home-based business operator to consider are:
Office equipment
Inventory (if stock kept on the premises):
Public Liability
Professional Indemnity
Workers Compensation
Personal Accident/Income Protection
Many small or micro business operators may feel they need little, if any, additional insurance. Picture this
Your home is struck by lightning during a major storm and all of your electrical equipment is fried. Your Home Contents Policy will cover replacement of household electrical appliances destroyed as a result of the lightning strike but does not cover equipment used in the operation of a business. Some companies do offer limited cover for home office equipmentyours doesnt.
Do you ever consult with clients at your home office? If a client trips on one of your childrens toys and is injured, dont expect to be indemnified by the public liability section of your household policy. Any liability arising out of your business activities will be borne by you.
Think about this for a minute. Medical expenses, loss of income due to incapacity, not to mention legal expenses if the matter goes to court plus any judgement that may be awarded. Without Public Liability insurance for your business, one claim is all it would take to ruin you financially.
If you keep inventory on the premises, remember that it is not covered under your household policy. A separate policy to insure your stock will be required.
Perhaps you dont handle stock. Your product may be your expertise and talent such as a business consultant or financial advisor. What if your advice is proven to be wrong? A financial advisor whose clients lose a lot of money because of his advice may well sue him for that loss. Without Professional Indemnity insurance, another small business folds.
Another question to ask yourself is this: What effect would losing my home-based business income have on my current lifestyle? If the answer is anywhere from hardly any to catastrophic, some form of Income Protection or Personal Accident insurance is recommended.
Then theres Workers Compensation. Workers Compensation? I hear you incredulously ask. But I dont employ anyone!
Consider this
Youre a graphic designer and very, very busy. Demand for your services has grown so much that you occasionally subcontract out some of the work.
On one particular occasion, you contact another designer with whom youve worked before. He meets you at your favourite coffee haunt and you go over the job specifications with him. The meeting ends well and you look forward to receiving his part of the project in due time. He cant wait to get started (or to receive your cheque).
On the way home from his meeting with you, the other designer is involved in a car accident and seriously injured. He will be unable to work for at least eight weeks and has no Personal Accident insurance.
His was the only vehicle involved so theres no recourse there either. His only alternative to keep life in some kind of order is to claim Workers Compensationfrom you. Since the accident occurred on his way home from his meeting with you someone who has offered payment for a service provided it would be difficult to successfully dispute his claim.
Regardless of what type of business is being operated from your home, it is imperative that the correct insurance type and level of cover is obtained. As is illustrated by the examples given, it only takes one incident, giving rise to one claim that can ruin, not only a business, but also lives.
And it is not just the business operators who suffer. The injured parties who are themselves unable to earn a living, through no fault of their own, also suffer – as do their families. Even if a judgement is awarded in favour of an injured party, the now bankrupt home-based business operator involved would have no means by which to pay it.
Bottom line? Talk to an insurance broker today!