Working or running a small business from home has implications for your insurance

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If you work or run a small business from home, there are implications for short-term insurance that you must consider, such as how it affects your cover and who should bear the burden of the risk.

“The pandemic years are a key example of a period in history where the conventional order of business was disrupted.

“Abrupt changes like a large proportion of the South African workforce making the shift to remote working, due to lockdown restrictions, gave rise to new risks which needed to be taken into account by advisers and insurers,” says Karen Rimmer, head of distribution at PSG Insure.

In the wake of the pandemic many companies amended their approach to work, allowing employees to either work fully remotely or via a hybrid system and Rimmer says this has left many employers and employees with questions regarding how working from home affects the nature or level of their insurance cover.

Entrepreneurs who run their businesses completely from home also had questions about insuring their personal assets that are used for business purposes.

How to determine who bears the burden of risk
“The most important distinction to make is determining which party carries the burden of risk when employees work from home versus when entrepreneurs run a small business from their homes,” Rimmer says.

When employees who work from home use equipment that belongs to their employer, such as laptops, mobile phones or printers, the employer will be responsible for the insurance cover on these items.

Rimmer says it is important for workers to check whether their equipment is adequately insured by their employers and whether there are any workplace policies that relate to how the equipment should be safeguarded in transit or when stored.

“It is also the responsibility of the employer to ensure that the insurer is notified of any changes to the risk address if employees are making use of any company assets, such as printers or desks to work from home.”

Personal insurance and remote working
“When employees use their own personal equipment for work, these items can be insured as part of a home or all-risk policy. Although not essential, policy holders can inform their insurers that they are using their equipment for both personal and business purposes.”

For the most part, working from home requires no material changes to the way personal insurance policies are structured, Rimmer says, but in the case of entrepreneurs who have decided to run their businesses from their homes, a number of considerations need to be made.

Business insurance for small business owners with home offices
There are significant advantages of taking out business insurance for entrepreneurs who use their homes as offices.

“A business insurance policy will cover work-related risks that may not be covered under a personal policy, including any third-party liability claim that may arise if a client or colleague visiting the business owner at their home is injured on the premises.”

Rimmer says entrepreneurs who run their businesses from home could also benefit substantially from including a cyber risk insurance product as part of their business policy.

This is particularly important for South African SMEs that store customer data, given that the country is among the most prominent “cybercrime hotspots” in the world.

“Those who collect and store large quantities of client data on their personal devices or in the cloud are particularly vulnerable to this kind of risk and need to make provision for protecting themselves both in terms of having a policy as a safety net and implementing good cyber hygiene practices,” she says.

Risks associated with loadshedding
As if we do not have enough to worry about, South African remote workers and home business owners are also vulnerable to the unique risks associated with rolling blackouts.

Cover for alternative energy products like solar energy systems, generators and inverters bought for use at home will fall under a personal policy.

Rimmer says the fact that you work from home or run a business from your house will not affect your personal policies.

“However, in both instances, policy holders need to ensure that they understand their responsibilities in terms of safeguarding their premises from any potential damage that can result from rolling blackouts.”

This could include taking measures such as installing surge protectors on all power outlets or within the main distribution board, ensuring that you have compliance certificates for the home’s electrical system and that there are fire safety precautions.

“If you are unsure about which cover will be more appropriate for your specific set of circumstances, contact your insurance adviser to discuss the options that are available to you,” she says.

Ina Opperman/The Citizen