Working from home? Get your Insurance Sorted

Insuring the unique and interesting situation of you working from home. I say unique, because every home based business is just a little different from the next. The environment, activity, location, work-space, type of business, transport/no transport, you get the idea.

Because of this, it can be quite interesting to arrange some insurance covers. It might be a machine bolted to the floor in the lounge; a dining table converted daily for laying out fabric to semi-industrial upgrades in the kitchen for food prep and cooking.

So when someone says it is simple, it is usually not.

When we look at these situations, often we can give a general idea, and in certain situations, we have a product or two that we can use straight off the shelf.

When we cannot use something straight off the shelf, we do need to go back to 'market' to get the best option and deal possible; this is why it sometimes takes time.

If you are working with a direct insurer, i.e. Not through a broker, the answer you are getting is the off the shelf option, usually with no other option. Which means you get cover if you fit and you get sent on your way if you do not.

Not always helpful. Add to that, the off the shelf option may not be the best option. However, it is an option at the same time if we know there's a different approach available we will go looking for a better one.

So what do you need to have:

Liability insurance is the key one people ask about. A combination of general liability and statutory liability is needed here for product based businesses. The general liability will help out if you damage something or someone and the statutory liability will help out with legal defence costs and penalties, but not fines, if you break the rules (law) and get taken to task about it.

If you also give advice or only give advice, you need to add professional indemnity to this mix as well. This covers damage caused by the advice you give.

This sounds like three policies. Usually, it is just one with various endorsements to cover specific aspects. Often includes internet cover, employer and employee cover too.

Directors and officers cover, or law safe if you are a sole trader, should also be considered. Many issues come back to the person responsible not the company/business. As a director or sole-trader, this is you. The D&O cover helps defend you personally when things go pear shaped.

That is the basics around liability what about the rest?

The rest are fairly straight forward, variations on the covers you probably already have. House, contents and cars.

First with the house cover, while this does not usually need a different policy, it pays to advise your insurer that you are running a business from home. They will want to know what and usually it just gets noted.

Contents cover is a bit different, this is fine for your personal possessions, and in the past, many had some reasonable provisions for non-stock and plant business equipment. This seems to have/be changing with many providers excluding anything business related.

This is where a specific business policy is needed, to cover off your stock, plant and equipment (machinery) for your business and anything else that is associated with your business that you own. This is for both theft and damage/loss.

Cars and vehicles, this is an area that also has had a bit of slack in it with people noting % of business use on their private cover. The challenge with this is what the customer service people say up front often differed with the approach at claim time.

This does not account for the creep in usage once your business gets busier. We have seen something similar with WorkSafe and H&S planning, something I will discuss shortly.

The most appropriate approach is to have a full commercial cover on your vehicle, your 'business' will pick up a good percentage of this as an expense. The last thing you want is to have is, the insurance company go through your diary at claim time and come back with 'You were insured for 15% business use, but for the last five weeks it has been 55%, we are not paying the claim'. Likely because you picked up a good contract or show, and you are busy right then when it is usually not nearly that busy all the time.

The last couple that needs covering:

Disability insurance, yes you need it. 60% of business failures are due to a disability relating to the key person in the business. ACC only covers 80% of taxable personal earnings, not expenses or turn over. If you have expenses and turnover, you are going to get a shock with ACC, and that is if you can prove income. Can't prove income, no claim paid. Moreover, no, it will happen to you, you are a human, aren't you?

Transport, marine cargo/marine transport. Not necessarily marine, but for your freight. Both for stock and materials, you are importing as well as the finished product you are transporting or sending via courier. There are limits to what the transport operator is responsible for. More so, if your product is specifically excluded from their terms and conditions.

Lastly, off the insurance track, to ensure your liability covers work, if you injure someone, you need to have a Health & Safety Plan in place, we can help with this too.

Have any questions about anything here? We recommend getting in touch with J-P from Willowgrove Consulting. Jon-Paul Hale (J-P) is the principal adviser of Willowgrove Consulting, an award winning insurance adviser with 17 years of financial services and insurance experience. J-P can assist you with sorting out all of your risk management. Contact J-P on, 02102269127, 092158998 & jon-paul@willowgrove.co.nz.

The information is only intended to be of a general nature and should not be relied upon in any part without obtaining full details of the products and services by contacting Willowgrove Consulting Limited. All product and service details, terms, conditions and other information are subject to change at any time without notice. Terms, conditions and fees apply to the various products and services and are available on request. A disclosure document will be provided to you on request free of charge.