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 page where you promote yourself. If the answer is yes to any of these – congratulations, you probably have yourself a home business.

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 impact on their ability to continue trading. While the level of cover will depend on the specific needs of each business, there are a few key points to bear in mind.

For a start, your home contents policy might already cover your basic home office set up – for example, our Plus contents policy provides cover for home office equipment up to $5,000. Home contents policies often cover your desk, computer, printer, filing cabinet and other similar equipment.

Some businesses may have a more expensive set up and a simple contents insurance policy might not be enough. A contents policy probably also won't 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 your business involves buying clothes from overseas and reselling them on TradeMe. While your computer set up might be covered under a contents policy, the clothes sitting in your home and awaiting sale are considered stock and wouldn't be covered.

Q. What would I do if stock was stolen or damaged?

Business assets cover will help protect you from stolen or damaged stock. With our Tailored business policy you’ll even be covered for 20% more of your stock over the Christmas period for free. It’s particularly helpful if your sales grow a lot over this time and you prepare with more stock than usual.

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.

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

If you’re using your family car for business purposes, you’ll need a Commercial vehicle policy. If you have a private vehicle policy and damage you're car while out running business errands, your claim would likely be declined and you could face a hefty repair bill.

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 harm to property, or even a person. The consequences of this can be tragic for small businesses as they rarely have the resources to defend themselves against claims. Liability insurance can help deal with the costs of these events and offer peace of mind to small business owners.

We offer three types of liability cover which can protect your business in various ways:

General liability

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

You could be a hairdresser, running a salon from your home. If you dyed 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. 

And what if that customer is a TV presenter and is unable to work as a result of a failed hairdo? They could ask you to cover lost wages too. Things can quickly add up, but liability insurance can help you cover some of the costs.

Statutory liability

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

Imagine you run an online shop from home and decide to have a sale. You email all your previous customers, but you don't know whether they’ve agreed to receive email marketing from you. With that one email you could have breached privacy and unsolicited email laws. Statutory liability insurance may mean your defence costs are covered if one of those customers makes an official complaint.

Employer liability

You can probably guess 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 at work. If you have employer liability cover and 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 qualified help can be vital 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 business. Get in touch today and see how we can help.

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