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!
