Understanding insurance and protecting your business
Working from home gives us freedom that is hard to find in an office environment. It’s easy though 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.
"There are a myriad of general insurance polices available, covering a range of events from the loss of a mobile phone, to being kidnapped."
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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.