Thursday, March 10, 2011

Does Insurance Matters To Your Homeshoring Office?

The home office is fairly commonplace these days as more people choose to work from home, either telecommuting or starting their own homeshoring 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.

You are responsible for ensuring that the insurance coverage is adequate for your homeshoring business. Some different types of insurance coverage for the home-based business owner 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 child’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 judgment that may be awarded. Without Public Liability insurance for your business, one claim is all it would take to ruin you financially.

Perhaps you don’t handle stock. Your product may be your expertise and talent such as a business consultant or financial adviser. What if your advice is proven to be wrong? A financial adviser 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.
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 judgment is awarded in favor of an injured party, the now bankrupt home-based business owner involved would have no means by which to pay it.

Bottom line? Talk to an insurance broker today!

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