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This is a sponsored article brought to you by Bizcover.
Many professionals enjoy the scheduling flexibility and low overhead costs associated with remote work. Whether you’re a freelancing IT specialist or running an eCommerce business from your garage, operating entirely from home saves a lot of initial overhead costs. But is it advantageous to skip purchasing commercial risk coverage, or is it even the right solution for your business set-up?
If you’re wondering whether your home policy will provide appropriate cover for your entrepreneurial home-based efforts, continue reading, as we’ll discuss the considerations and essential policies of business insurance which can help protect your reputation and assets.
One of the first considerations when deciphering if and what business insurance is appropriate for you is to answer whether you’re operating as a sole trader or as part of a company. Sole traders are personally responsible for their business, which includes everything from profits and losses to operational costs and debt. Even if you’re the sole owner and employee of a registered business however, this is a structure in which a company exists as a separate and legal entity. It is taxed at a corporate tax rate, and bound by different regulations and laws.
Therefore, if you’re operating as a sole trader, you might not need all or even any aspects of business insurance, especially if you have comprehensive home coverage which can extend to your work assets. If you’re running a designated company, even if entirely from home, business insurance will come in handy.
It’s important to consider the variations and specifics of your situation, but here are some of the benefits and uses for business insurance, even for those who work entirely from home.
While virtual offices often reduce traditional expenses such as vehicle fuel and property maintenance, some risks remain. You’re still vulnerable to potential financial losses, and many residential plans don’t account for hazards associated with running a business.
If your computer equipment gets damaged or stolen, or a client slips and falls inside your office, you may have to cover those costs out of pocket. Regardless of where you’re working from, you may also face legal claims over data breaches, contract disputes, copyright issues, and errors in your professional services. Defending yourself against these claims takes time and considerable expense, which is where professional indemnity insurance can step in to offer financial relief.
You might not need commercial property insurance alongside your home insurance, which covers interruptions such as fires, floods, and other damage to your dwelling. However, knowing these limitations is vital to keeping your business viable long-term, so research the terms and conditions of your existing home coverage.
Business insurance policies cover unique risks and liabilities facing business owners working from home, providing a safety net that home insurance plans don’t. Let’s take a look at some examples.
If your customers or clients visit your home, a general or public liability policy covers claims arising from injuries and accidents that occur on your premises or as a result of work-related services, including slips and falls or miscommunications.
Modern home offices often contain specialised tools, laptop or desktop systems, printers, cameras and other costly technological equipment. If this property is damaged or stolen, with proper coverage, you can replace it without bearing the entire financial burden. If your home workplace contains customised furniture including branded set-ups used for producing content or engaging with clients, this may not be covered under personal contents and belongings insurance. Likewise, any items used directly and primarily to profit your business would likely need specific commercial property protection coverage.
The risk of stolen intellectual property and financial data increases as more small businesses move online, without the protection of office-wide, commercial cybersecurity measures to protect them. Cyber liability clauses cover your costs for protecting client data and managing the fallout from security breaches, including the retrieval of lost or stolen data. This coverage is essential if you store customer information on your home desktop or mobile devices, or operate an e-commerce store where payment takes place through your website.
Professional service providers such as accountants, doctors, and consultants should consider indemnity coverage, protecting against claims of negligence and errors during your work. Even with the best intentions, mistakes happen, and clients may hold you responsible for the financial or other costs they suffer. For example, a doctor who works entirely via telehealth video call appointments could be misheard over a glitch in internet connection, and as a result, the patient may seek incorrect medication or claim a failure to receive the expected service. Protect yourself from potential losses and lawsuits by including indemnity in your insurance policy.
Intellectual property or IP insurance is invaluable for creative professionals such as photographers, writers, and website designers. Under this coverage, your unique creations are protected against theft and unauthorised use by third parties, especially if you create original content that could be stolen, copied, or otherwise infringed upon. Many clients hiring for contracts and commissioned projects look for contractors carrying this coverage to safeguard against disputes over using your work.
Foregoing coverage might be an option for cutting costs, but consider your exposure to financial losses stemming from a single computer failure. Hackers causing data breaches are daily occurrences. Large companies have the resources to weather these challenges, but sole proprietors operating at home aren’t as fortunate. A single lawsuit or recovery costs may cost thousands more than an annual policy premium. That’s why the right insurance protection should form part of your disaster recovery plan.
Determine how much coverage you’ll need by listing your risks. Are you handling sensitive customer data or meeting clients onsite in your residence? Do you sell physical products which might lead to liability claims due to injury or damages to clients’ belongings or wellbeing? Could you afford to replace a printer or laptop if they were stolen during a burglary at your home? Can you afford the legal defence costs if a client files suit for an error in your professional services?
Yes, business insurance is an added expense. But it’s also a long-term security investment, assuming you plan to run your endeavour indefinitely without maintaining other income streams.
Regardless of where you set up HQ, be sure to consider the nature of your work and the associated risks, such as in-person meetings occurring in your home, and handling sensitive information and customer data. Be objective in your assessment, and ask your industry peers for their opinions to tailor your policy choices better.
Consult with your broker to evaluate the options and prevent overspending. Search for providers specialising in home office protection since they’re already familiar with home-based business risks. Customise your policy to cover your particular needs, and if your industry is high-risk, with specialised equipment, be sure your policy reflects those requirements so you can enjoy more peace of mind.
