What if you operate your business from home?

A large proportion of small businesses operate from home. Shehnaz Somers, the head of commercial underwriting at Santam, says: “In the United States, for example, 22 percent of small business owners/managers run their businesses from home. Among these, just under half of owners depend on their homeowner’s insurance to protect their businesses, and eight percent have no insurance at all to protect their property.”

If you are about to start a small business from home, it is important to find out whether your business, or certain aspects of it, can be covered under your personal home and vehicle policies, or whether you need to take out separate commercial cover. This depends very much on the type of business and the risks associated with that business.

Somers says some insurers, such as Santam, make provision in their personal lines policies for a small business operating from home, up to certain risk and rand-amount limits – at an adjusted premium. For example, a householder’s policy might cover the contents of a room in your home that you use as an office. Or a private vehicle policy may cover your car for business use if, for example, you use it to consult with clients. But it would not extend to covering a plumber’s vehicle.

Whatever you do, you need to declare it to your insurer. If you do not, the insurer may repudiate any claims, be they for your personal or business property.

The important thing, says Somers, is that business insurance is complex, and you need to talk to an expert broker to get a clear idea of what to insure for. There may be risks attached to your business of which you may not even be aware. For example, if you are making jams at home that you sell, you may need product liability cover, in the event of someone suing you for food poisoning.

And rather over-declare than under-declare, she advises. professions. The cover may be tailored for a specific profession.

Directors and officers’ liability cover for directors and high-ranking officers of companies, who may be held personally liable for a loss.

Product liability cover for injury or damage to third parties arising from defective products. “You should purchase this if you are involved anywhere in the supply chain of products, whether you are manufacturing, supplying, importing or exporting,” Somers says. Should you or one of your business partners or employees die or become disabled following an accident, at work or not, this cover will provide a payout to the company (not the employee) based on an agreed compensation limit. This can either be on a “stated benefit” basis (related, for example, to an employee’s salary) or a specific amount. Cover may be for permanent disability only or for either permanent or temporary disability. This cover would normally supplement group life and disability benefits and compensation benefits for employees paid under the Compensation for Occupational Injuries and Diseases Act.