Besides the standard damage risks of fire, water, and theft, that all policies should cover, people who run commercial operations from their home need to consider a number of other risks that may not be covered by their personal lines policy. These typically include:
1. Business contents
While most home policies will cover basic computer equipment and home office furniture, these policies will usually not cover stock, tools of the trade or machinery. People running business operations from home also need to consider risks relating to their computer equipment (especially if they remove portable equipment away from the premises), and the software related to their business.
2. Manufacturing risks
Any business that involves manufacturing or requires the use of flammable or dangerous materials, must be specifically insured under a commercial policy.
3. Employee theft
While “theft” is likely covered by a personal lines policy, it is important for home business owners to be aware that any theft or fraud committed by their employees will likely not be covered by a home policy.
4. Liability risks
Liability risks that are not insured against, such as a visiting client tripping and falling at the private home from where you operate your business, can have a massive negative impact on your financial health.
5. Professional indemnity risk
Anyone who offers professional services or advice could be held legally accountable and it is therefore important to be covered for this risk under specialist commercial liability policies.
6. Products liability
If you make foodstuffs or manufacture cosmetic treatments from your home, you will likely require a commercial policy which is structured correctly to ensure that you have products liability cover.
7. Load shedding
Many home businesses need to consider the risk of business interruption due to interrupted power supply, as well as the potential power surges which can cause serious damage to any electronic equipment once the electricity supply is turned back on. Typically, these risks are limited under most home insurance policies.
8. Vehicle use
It is also important to read the terms, conditions and exclusions of your personal lines motor policy carefully to determine whether any vehicle you use for your business operations (to make deliveries or visit clients, for example) will be covered under the terms of your policy. It is extremely important to disclose to your insurer whether your vehicle is used for private purposes, or whether it is used for commercial purposes.
At the end of the day, when running any type of commercial operation from your home – regardless of the business’ size or nature – it is best to talk to a broker or your insurer to ensure that your policy (whether it is personal or commercial) covers the risks that you do not have the resources or appetite to cover yourself.
Home business owners that are looking to upgrade their level of cover should do their research and find a suitable product that can grow with their business. The Old Mutual Insure product provides a comprehensive package that can be tailored to the insured’s specific needs. The insured can decide how much they can afford and add cover as the business grows. While the product is not specific to small home businesses, the advantage is that the policy will remain appropriate as the business grows and the needs of the insured changes.