By: Bertus Visser, Chief Executive of Distribution at PSG Insure
In a tough economy, which we are all too familiar with lately, it can be tempting to try to make extra money – or save money – wherever possible. Job losses or reduced income could lead to considering new ventures and gaining a new income stream, or starting a business from home.
A new venture needs new cover
Becoming an entrepreneur is a bold step, and not only valuable but often necessary in a country like South Africa. Those who are successful or who create employment opportunities for others can contribute meaningfully to the economy. While there are many aspects to consider, from how you will run your business to the associated tax implications, your short-term insurance cover should be a main consideration too.
Failing to have enough of a safety net from your insurance could mean failing to keep your business going if times get tougher. While smaller businesses may forego short-term insurance to try to cut costs, not having the right cover in place can be the costliest business decision of all. Whether being an entrepreneur means running a side venture around another job or completely transforming your home into a business, it’s important to touch base with your adviser and to make sure your short-term insurance supports your plans too.
Home is where the work is
To kickstart a venture or save ongoing costs, many new or part-time businesses start (and often remain) at home. Many personal lines short-term insurance policies provide a limited amount of cover for small businesses. An example might be offering sewing services, or pursuing an avenue not intended to be a fully-fledged business. However, you will need to disclose your dealings to make sure you’re appropriately insured. Depending on your specific line of work, you may need to have more than a standard policy in place.
Remember that your insurer needs to know what is happening in the home you are insuring for it to be covered sufficiently. A home office used occasionally isn’t the same as having staff working from your home on a daily basis. The risks involved (for example, fire) may mean an increased premium – but a fire without cover can mean the end of owning a home, let alone having a venue to work from. Equally as important is ensuring that the value of your home and its contents reflect correctly in your insurance policy.
If you are running a fully operational business from home, beyond needing to be zoned legally for business with the necessary permissions in place, you will need business insurance to match. Third-party liability cover is essential (even if it is just you and an assistant sitting in your living room three days a week) and your policy should include any office equipment you purchase. You will also need to ensure that all staff you employ have their own contents insurance for items they may bring with them to work. Running your business from an office premises has its own insurance considerations, which will depend on your vocation and whether you rent or own the space. An adviser can help you determine exactly what cover you need for what you do, and where you do it.
Park any doubts
If you use your car for business purposes, it must be insured accordingly. Business vehicles come with enhanced insurance considerations, so note this if vehicles are a part of your work. (Insurers will determine what the car is most used for, depending on the information you provide.) This applies if you are using your car as a transport service, delivery service or as a means to attend to clients. If any staff members occasionally use your car, ensure it is comprehensively covered.
Prepare for any outcome, anywhere
Specifying electronics can be costly, but when your business is mostly dependent on you and your laptop being together, it is your best option. Imagine if your computer was damaged or stolen but you had no funds to replace it? Whether you work from home or frequent coffee shops in working hours, your transportable electronics are likely best insured under the All Risk section of your policy, as you’ll be moving around with them.
Making the most of your new chapter
Just because you might be a smaller business than others, doesn’t mean your business is risk free. In fact, there may be more risks than those that are immediately obvious – and the risk of having less cover than you need is usually the biggest risk of all. Working for yourself should place a regular check-in with your short-term insurance adviser on your essential checklist. Not only does this keep costs in check but it also ensures you have the cover you need to protect both your entrepreneurial passions and your profits.