As a Homeworker starting or running their own business, it’s fair to say that you are an ‘adventurer’ and risk-taker. It is important to network with other like minded people to find out what the good deals might be and to share experiences.
Owners often over-look insurance in small business risk management plans. You probably see insuring your home as common sense and the same should be true for your business.
Insurance provides a safety net when things go wrong and can protect you financially.
If yours is a limited company, then with the more complex business model you have some protection against personal financial loss – ‘limited liability’. Your assets are protected but your business could go bankrupt. However, a well insured company could take the hit and carry on.
If you’re a sole proprietor then the insurance you buy is to protect your business, you and your personal assets (including potentially your home) from a legal judgement that arose from an accident or inadvertent consumer mistake.
Insurance is also a potential door opener as customers will be reassured by your cover. Some professional bodies you join require it
Tip 1 – Shop around before you start a business and on every renewal; good insurance management is important as cover and premiums can vary considerably.
What to Insure?
The most obvious financial risk is that of being sued. The right insurance cover will address your financial risk or liabilities. An unhappy customer often becomes adversarial and seeks compensation beyond setting things right – which should always be your first option. Let’s have a look at the common forms of insurance you should consider.
Liability insurance comes in several forms; Public Liability (often wrapped with Product Liability – critical if you are selling things) covers you and your products in case you cause damage or injury. Professional Liability is insured as Professional Indemnity. It is a special form of liability cover for work where you advise or design or offer services to a customer where you might cause financial loss (without any physical damage).
Employees, remote workers, volunteers, sub-contactors
Even as a homeworker business, the first thing to say is that you must have Employer’s Liability (EL) even if it’s only ad hoc work (and even if your workers are only volunteering it’s a very good idea to have it for them). EL protects you against any claim for injury that occurs while at work. So, if you ‘direct’ a person’s work or activity for your business then you must take out EL.
The only exceptions are if you are working with close family member or you use genuine sub-contractors; specialists who bring skills and do not work under your supervision.
Sub-contractors need their own insurance and so check they have! If they cause ‘damage’ and it turns out they haven’t got insurance, your insurer may well have the right deny they are responsible. Note: If you are not certain look in the endorsements on your Schedule or in the policy wording itself.
Tip 2 – Make sure you understand the exclusions or inclusions for Stock/ Buildings/IT/office equipment. Make sure your cover fits your homeworker business lifestyle, if not find a different insurer.
Other Insurance to think about
Income protection and Personal Accident insurance policies protect you as the bread winner. So, you might want to look at policies that give you a lump sum or a supplementary income in case you can’t work.
Gadget Insurance – many comprehensive home policies will cover home office equipment – but only in the home or geographically limited. If your laptop goes with you on client visits or your phone is your office, then you should think about business gadget cover.
Tip 3 – Remember to treat insurers as just another supplier; keep them informed of changes, keep records and read the contracts/policy carefully before buying or something goes wrong.
In general: Remember that if you make a claim your insurer, like any business, is trying to minimise their losses and so keep all your receipts, photographs of products or work, be truthful. If you think you may face a claim, report it early, even if a formal claim isn’t later needed.