A Fin24 user wants to know how pivotal it is for a small business run from home to be insured. He writes:
How pivotal is it for a business to be insured if it is only making between R50 000 and R80 000 per year?
Which risks could you encounter that would need insurance if you are working from home and have no premises to worry about?
Shehnaz Somers, head: commercial underwriting at Santam, responds:
Whilst the company revenue may be small, the answer to the question of whether such a business would need insurance depends on whether the owner is able to self-insure (which is to pay out of his or her own pocket for any loss that may occur).
It would also depend on which risks he or she may encounter that would need insurance if, for example, you are working from home and have no business premises to worry about.
For businesses, the risks are many and often specific to the type of business being run from home.
Some examples of risks are:
- Theft and burglary;
- Business interruption;
- Personal accident cover (cover for individuals and employees at your business premises);
- Damage to electronic equipment (cover for the reinstatement of lost data and computer programmes);
- Fire which results in damage to the business premises;
- Liability losses (for example, if you negligently cause damage at a client's premises);
- Vehicle damage (including car hire while you wait for repairs to be done).
Always remember that products or services are always at risk in terms of liability and that every business owner should consider cover in the event of third-party claims.
An owner of a business must be aware that some personal (home insurance) policies exclude cover for business activities and should consider cover that suits his or her insurance needs.
At Santam, we recommend business owners speak to a broker to ensure that his or her business is covered should an unforeseen event occur.
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