Insurance Matters To A Home Office
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Author: Jim Christian 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
equipment…yours doesn't.
Do you ever consult with clients at your home office? If a
client trips on one of your children's toys and is injured,
don't 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 don't 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 there's Workers' Compensation. "Workers' Compensation?" I
hear you incredulously ask. "But I don't employ anyone!"
Consider this …
You're 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 you've 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 can't 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 there's no recourse there
either. His only alternative to keep life in some kind of order
is to claim Workers' Compensation…from 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!
About The Author: QuoteSphere was developed to help those that
are in the middle of an insurance crisis. In the United States
we have seen a continuing rise in the cost of home insurance.
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