Evaluating your risk

Is your business home-based and do you have proper insurance cover?

An important part of the success of any business is ensuring you’re protected from obvious risks. Insurers require that you declare any information that might affect your risk, which is why it’s important to tell your insurance company that you’re running a home-based business. But how certain are you that you are adequately covered?

Evaluating your risk 

There are a few key areas of risk you need to watch out for. Ask yourself: 

Running a business from home is a convenient choice for many entrepreneurs. It gives you flexibility and precious family time and helps to keep overheads low.
  • Does your business have customers or clients who come to your house, such as for appointments, alterations or pick-ups?
  • Does your business require special equipment? This could include a laser-cutting machine, laptop or commercial kitchen equipment for a catering business.
  • Are you using your car for business purposes such as deliveries or meetings with clients?
  • Does your business make or manufacture anything?
  • Do you offer a professional service? This includes accountants, engineers, auditors, architects, doctors and lawyers – anyone who is a formally certified member of a professional body.
  • Do you store a lot of data – including personal details from customers and back-up data?
  • Do you have employees working for you at your home? 

How to cover yourself against risks and claims 

If you answered “yes” to any of the questions above, it might be time to consider specific insurance for your small business. Here are the types of risk and claims you will be covered against: 

Personal liability: Should a client or customer visit your home for business purposes and get injured – e.g. trip over equipment and fall – personal liability protection can cover you against a lawsuit. 

Equipment cover: Remember that most insurers will only insure each household item against theft and damage up to a limited amount. If your business equipment is worth more than R2 500, you have to protect it with business insurance. 

Business car cover: If you are in an accident on a business-related trip – e.g. visiting a client’s factory out of town – your personal car policy will not cover the damages. 

Product liability: Anything you make – whether jewellery or food – can carry a risk. For instance, if you sell prepared frozen meals and customers got sick from eating your food, you could be sued. 

Professional liability: If you provide professional services (accountant, lawyer, tax advice), you need cover if there are any malpractice claims against you. 

Data/cyber insurance: Your personal insurance will not cover the loss of business data, for instance, if your back-up hard drive or computer is damaged in a fire. If you are storing client information (names, addresses, email addresses, even credit card details) or your proprietary business information (supplier names or confidential pricing related to your home-based business) is put at risk by a data breach, this type of insurance will cover you to repair the vulnerability and any legal action from affected customers. 

Choose the right insurer for your specific business needs

Always choose an insurance company that has experience in dealing with big and small businesses. Also, check that the insurer has a good record for claim payments. Find out if there are other benefits for policyholders, such as a 24/7 claims and emergency service. 

Running a business from home is a convenient choice for many entrepreneurs. It gives you flexibility and precious family time and helps to keep overheads low. However, anyone who owns a home-based business – no matter how small – faces the same risks as any other company.