Understanding insurance and protecting your business

Working from home gives us freedom that is hard to find in an office environment. But it’s easy to forget about the importance of understanding insurance and ignore the possible consequences of a stolen laptop or an injury sustained while at work.

Working from home can blur the line between work and play, for example home and contents policies vary in the cover they provide for the home office. Does a home office have equal occupational health and safety (OHS) requirements as a traditional office? And what would happen if a visiting client slipped over in your driveway?

There are a myriad of general insurance polices available, covering a range of events from the loss of a mobile phone, to being kidnapped. Below are some short answers to the most commonly asked questions about understanding insurance that I get from people who run a business from home.

Do I need Liability Insurance?

In many cases this question has been prompted by a new client who asks for a certificate of currency. It is increasingly common for companies to reduce their own liability exposure by making contractors responsible for theirs. Public & Products Liability primarily covers compensation for damage to property or bodily injury in connection with your business. For some businesses, such as IT consultants, there is a grey area when it comes to distinguishing between what is a product and what is a service. Whether you consider the risk to be great or small, many contracts require this.

Do I need Workers Compensation?

Workers Compensation legislation varies from state to state and it is often misunderstood. It is, however, statutory and therefore dangerous to ignore. The definition of wages is broader than you might think and so even a business which is not Pty Ltd can be required to have Workers Compensation. Also OHS Legislation goes hand in hand with Workers Compensation, which is easy to forget when your office is in your home.

What is Professional Indemnity?

Again this is a common question which stems from a new contract or a new client. Professional Indemnity is a specialised insurance product with many potential pitfalls. Essentially it provides financial protection to a wide range of professional advisors, from insurance brokers to interior designers. If a client suffers a financial loss as a result of alleged neglect, error or omission, a Professional Indemnity policy should respond to defend claims and pay damages. The terms and conditions of these policies vary greatly and insurers often use endorsements to define or reduce their exposure and this is not always to the benefit of the business or individual.

Is it all doom and gloom?

The answer is no. Insurance is just one way of treating threats and weaknesses, but it can be a valuable tool to protect your business. Some businesses, once they have bitten the bullet and taken out relevant insurances, use this confidence to get on the front foot with their clients and turn a threat into an advantage. And don’t forget, in many cases insurance is a tax deduction.

PDS: The precise coverage afforded is subject to the statements and information in the relevant Product Disclosure Statements (PDS) and the terms and conditions of the insurance policy when issued. We recommend considering the PDS and policy wording when deciding whether to acquire insurance products.

Sean Morriss provides a range of general insurance solutions and services to small businesses. He runs his own business as an authorised representative of Insurance Advisernet Australia, one of Australia’s largest general insurance brokers.

10 comments | Add your own 1 2 | Next» View all»

Thanks, Sean - a guide to costs and packages for specified situations/soloists would be welcomed by us all, I'm sure! Grant Hyman from Sydney | Read my articles
I Sell General Insurance too - have done all my life.
It is a great industry to get into by the way , even if people say 'insurance' like they say 'used car salesman'.
Sean's point's are brief and valid. Insurance can be complicated just like legal or medical issues. Following that example most of us don't treat ourselves - we get a Dr. We don't do legal work, we get a lawyer.
So don't try to figure Insurance out yourself. Get professional advice. In most cases this costs little or no more and the right advice will save you money and give you confidence going forward.
Grant - it's not really possible to give accurate guides to costs for this reason, everybody's circumstances are different. Get a professional adviser - try a couple till you get one you have confidence in - and let them do the work for you. And remember that the cover in the fineprint is what makes the policy. If you aren't going to read it then rely on the advice of someone who has and don't just shop on price. Cheers Matt Dell from Ulladulla NSW
Thanks for the response Grant & Matt, it's true that when it comes to insurance the devil is in the detail, so you need to get advice before making a decision.
The insurance market is cyclical and we are currently at a trough, this is good news for consumers as rates are generally quite low .
As to prices, insurers have 'minimum premiums' which vary greatly , but I rarely see Liability premiums less than $400 or Professional Indemnity premiums under $1,000.
Every business is different and the only way to be sure you're getting the best deal is to talk to an independent adviser. Sean Morriss from Forestville | Read my articles
Dont forget the most important person in your business and your life !.. You. Personal insurance is equally important . The peace of mind afforded by having Income Protection insurance is invaluable. If you fall of a ladder on Sunday afternoon and cannot visit clients , or break an ankle skiing .. it is sure to disrupt your business. Find a Life insurance broker who understands solo business owners and the people behind them . Discuss your concers and they will provide a peace of mind solution....not just sell you a policy. The risks of going forward with out personal insurance are like driving an uninsured car ... but the consequences far more financially traumatic. Alan DELLER from Melbourne
I find it very hard to find a good insurance broker.I've contacted a few in the past year and they either don't return my call or it took them a long time to respond.When you are in business customer service is very important. By the way, I'm still looking for a good one! Can someone recommend me a good insurance broker? Judit Nagy , The Office Witch from Sydney
Hello Judit,
I'm sorry you've had a rough run with brokers in Sydney, as you say customer service is vital.
I'd be happy to help you, you can email me as per my profile and I'll get back to you tomorrow (I'm out of the office today). Sean Morriss from Forestville | Read my articles

10 comments | Add your own 1 2 | Next» View all»

Add Your comments

Preview comment

Name

Website *

Town / city and country

Email (never sold, displayed or given away)

* This will link your name to your site. So please avoid self promotion elsewhere! We delete spam, disrespectful or off-topic comments.