Minding your own Business

May 16, 2010 - PRLog -- OVER the past decade more and more people have discovered the joys of working from home.

A desire to achieve a better work-life balance, parents wanting to combine work with child rearing, the rise of the internet, downsizing and contracting out, has seen more than one million Aussies setting up a home-based business.

It's a perfect match for the motivated. You can work in your pyjamas, work around school pick up and drop offs, turn a passion into a job and cut the travel time to and from a workplace.

According to the Australian Bureau of Statistics, just over 67 per cent of small businesses are home-based.

Working from home also cuts the overheads for start-ups. But there are pitfalls for the unsuspecting and one of them is lack of insurance or underinsurance.

RACV Business Insurance Manager Peter Stanley said people running home-based businesses may not fully understand the risks.

He said the potential problems were wide-ranging. Many home-based businesses store large amounts of stock at home, which could run into tens of thousands of dollars, but this would not be covered by an existing home and contents policy.

Think of the small business selling children's garments via the internet with thousands of dollars in merchandise stored in a garage or spare room.

In addition to stock, there are the expensive computers and other associated equipment that may not be included in a normal domestic insurance policy.

"Without proper insurance cover, significant events such as a fire or storm could seriously affect your income, not just your home," Mr Stanley said.

Mr Stanley said an RACV survey of more than 260 business owners found that almost half of the businesses operated from home and that 50 percent of those home-based businesses had no business insurance.

"Although many of these businesses believe they have insufficient business assets to warrant insurance cover, they are not considering the liability risks of running a home-based business, " Mr Stanley said.

RACV Insurance recently introduced EasyBiz@Home, a specialised business insurance policy designed for home-based business, in response to a growing demand for a more appropriate product.

"We offer home-based business operators a tailor-made product that meets their needs and the convenience of a paperless, over-the-phone application process," he said.

Mr Stanley said while many businesses overlook insurance altogether others are underinsured.

"Inadequate insurance cover due to business growth is a problem when what commenced as a micro business has grown significantly," he said.

"Examples of these are stock levels on the premises increasing over time and the insurance cover not being updated accordingly."

Mr Stanley said inappropriate insurance cover was another aspect to consider.

"Domestic home insurance cover may not sufficiently cover certain situations or may specifically exclude certain risks," he said.

Mr Stanley said home-based business premises were usually designed for domestic living so the increase in people coming and going, whether it is up slippery steps or poorly designed driveways could be problematic.

"Customer visiting hours could also be an issue if you are, for example, a home-based accountant and you have inadequate lighting on the premises and someone hurts themselves," he said.

Mr Stanley also warned that a laptop computer or expensive photographic equipment damaged or stolen at home may be covered by a home contents insurance policy but once you are on the road and visiting clients it may not be automatically covered.

"Your business equipment’s not covered if it’s stolen from your motor vehicle, nor are any of your customer’s goods, unless you have a business insurance policy," he said.

Mr Stanley said a burglary could be as big a setback for a business as significant damage to the business property caused by fire or some other defined event.

He said people need to check their policies to ensure their business risks are appropriately covered.

The Insurance Council of Australia estimates that 70 percent of underinsured or uninsured small businesses affected by a major event such as a legal claim, fire or storm never recover and will actually fail within 12 months as a result.

For more details of EazyBiz@Home, to get an estimate, arrange a policy or for more information contact RACV Insurance on13 RACV (13 72 28).

FOR a time photographer Robert Duncan kept his valuable photographic equipment under his house and contents insurance policy. But news that a photographer friend had equipment he was using for commercial use stolen from his house and it was not covered by the domestic policy was a wake-up call.

When it came to tailoring a policy for his business, Pixxil Photography, Mr Duncan said he was lucky to have had an insight into how insurance companies handled claims.

He worked for a company that handled claims stolen and damaged photographic equipment.

"I got a pretty good first- hand knowledge of the customer side of things and who is actually good and bad to deal with," he said.

"That was one of the reasons that we switched over to RACV."

Mr Duncan said RACV Business Insurance stood out from the pack. He said he was able to work out a policy that provided public liability insurance and coverage of his equipment.

The Werribee-based small business operator said once he switched all his insurance policies over to the RACV the premium became very attractive.

Kerrie Thomas' unusual home-based business required business insurance with a difference.

The former nurse, based near Macedon, works as a long-arm quilter. Once crafters have finished their work she puts it all together. It requires a giant sewing machine to piece together the mattress sized quilts.

Ms Thomas, who trained as a nurse, was able to turn her passion into a business about seven years ago.

While she has gradually fine-tuned the business, realising word-of-mouth is her best advertisement and figured out how much to charge to ensure she is paid for her labour intensive services, insurance was a problem.

Any policy had to cover a range of eventualities.

Living near a bushfire prone area, the policy had to cover her home and her business and assets.

As she is often working with quilt projects that are extremely valuable she needs to ensure they are properly covered.

Mr Thomas said when she went searching for insurance for her business, Black Forest Quilting, possible insurers found it difficult to place her in a category.

"They were calling me manufacturing, but I am not really doing that," she said.

Ms Thomas said RACV Business Insurance was able to tailor a policy to suit her needs.

Ms Thomas said she also had public liability insurance in case someone was unlucky enough to "fall down and break a limb" when doing business at her house.

She said it also gave peace of mind in case something unusual happened such as someone being pricked by a pin she had accidentally left in a quilt.

As Liana Amici grew her home-based bridal couture enterprise the need for business insurance became apparent.

"The material I have tends to be very expensive, some of it can be thousands of dollars per metre," Ms Amici, the owner of Ascot Vale-based Amici Couture said.

"I previously did not have business insurance but since I am a lot more visible now I need insurance that is going to cover the business," she said.

RACV offer a range of insurance policies to suit all sorts of needs - from business insurance to Home Insurance. Switch to RACV Insurance and benefit from the great range of discounts and savings.
http://www.racv.com.au/

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RACV offer a range of insurance policies to suit all sorts of needs - from business insurance to Home Insurance. Switch to RACV Insurance and benefit from the great range of discounts and savings.