Does my home office need business insurance?

When is a home office more than a home office? If you’re running a small business from home, here’s what you need to know about insurance cover.
Published in:   Contents

Kiwis are an enterprising bunch. It’s been estimated that there are over 460,000 small businesses here in New Zealand. Many of those started, and continue to be run, right from home. But what elevates the computer nook in your home to an actual office – and how does the difference affect your insurance?

An easy test is to ask yourself “Am I selling a product or service from my home, in exchange for money?” Think about whether you’ve got a website, stock, equipment, or even a business Facebook or Instagram page where you promote yourself from. If the answer is yes to any of these – congratulations, you probably have yourself a home office.

Q: My business is pretty small – do I really need insurance?

Small businesses are especially vulnerable to risks as a single event can have a devastating effect on their ability to continue trading. There are numerous risks that businesses need to consider and be prepared for. While the level of cover will depend on the specific needs of each business, there are a few common scenarios that could apply.

For a start, your home contents policy might already cover your basic home office set up. Our Tower Insurance Plus Contents policy provides some cover for home office equipment up to the limit of $5,000. In many cases, it can cover your desk, computer, printer, filing cabinet and other inexpensive equipment. Some businesses find that they operate a more expensive set up, which is when your contents policy cover might not be enough. A contents policy also may not cover any stock you have at home, or your liability if something goes wrong so it pays to look into getting the right cover for your particular business needs.

Q: Why would I need to cover my stock?

Let’s say you buy clothes from overseas and resell them on TradeMe. While your computer set up might be covered under your contents policy, all the clothes sitting in your home and awaiting sale or shipping, and your packaging are considered stock and won’t be covered.

Q. What would you do if these were stolen or damaged in a flood?

Business Assets cover will help protect you from these risks. With the Tower Tailored Business policy, you’ll even be covered for 20% more of your business assets stock sum insured from November to January, for free. It’s particularly helpful if your sales grow a lot over this time and you tend to increase supplies.

You might find it hard to get a business insurance policy that covers faulty imported stock – our tip is to always buy from reputable suppliers and make sure they have good refund policies in place as our policy does not cover this.

Q: I’m ok to use my personal car, right?

If you’re using your family car for business purposes, you’ll need to get a commercial vehicle policy. Imagine if you’re out and about running business errands and get into an accident. You could find your claim is declined and be in for a hefty repair bill – and a cancelled policy.

Q: Liability cover seems extreme for my small business. Do I really need it?

Even if your business is home-based, there’s still a chance you could face an expensive lawsuit for causing damages to property and/or bodily injury. The consequences of this can be especially tragic for small businesses as they rarely have resources to defend themselves against these claims. Liability insurance can help deal with the costs of these events and offer much-needed peace of mind to a small business owner.

Tower Insurance offers three types of liability cover which will protect your business in various ways.

  • General liability

Also called public liability, this option may cover you for amounts that you might need to pay because of injury or property damage that you or your goods or service have caused. It’s particularly relevant for service companies, but companies that sell physical goods should also consider it.

Let’s say you’re a hairdresser and have a salon set up at your home. Perhaps you’re dyeing a customer’s hair and the product severely burns their scalp. You might need to refund the cost of the service and pay medical bills. Now imagine your customer is a famous TV presenter and unable to work as a result of a failed hairdo – they can ask you to cover for lost wages too. Things can add up quickly, your liability insurance may help you cover some of the costs.

  • Statutory liability
There are a lot of laws to keep up with, and inadvertently breaking one can cost thousands of dollars. Even if you’re not in the wrong, you could end up having to defend yourself in court.

Let’s say you run your online shop from home. You decide to have a sale to get rid of some excess stock and email all your past customers. When doing so, you might not consider whether they’ve agreed to email marketing from you, or you might accidentally include all your customer email addresses in the ‘to’ box. With one email you’ve breached privacy and unsolicited email laws. Having statutory liability cover may mean your defence costs are covered if one of your customers makes an official complaint, and you need to engage a lawyer.

  • Employer liability

You can probably guess from the name that this is only relevant if you have employees, including permanent or seasonal help.

If your business pays people to help tackle the workload either temporary or permanently, you officially have employees and are responsible for their wellbeing. Employer liability is one of the things you should look into more closely: if an employee makes a personal injury claim against your business, you may be covered for your defence.

Q: What other business insurance options are there?

There’s a lot to consider when you run a business and sometimes qualified help is needed. If you’re not sure what option is right for your business, We can help design a package that covers the risks unique to your specific business. Get in touch today to see how they can help.

Please note, these are only a summary of the policy wording. Please refer to the appropriate policy wording for full details of terms and conditions.

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