Insurance and health & safety for home-based business owners

Date: 13th August 2019

Ranked the easiest place in the world to start a business, it’s no surprise that many New Zealand entrepreneurs choose to operate from home. Businesses of all types are being run in classic Kiwi DIY fashion. Among them are freelancers, contractors and ecommerce entrepreneurs, while many tradies, retailers and hospitality businesses also run home offices.

woman working from home

While there are many benefits to having the freedom to work at any hour of the day or night, in your pyjamas, and close to the alluring comfort of your well-stocked fridge, there are added responsibilities that come with home-based businesses.

Insurance considerations and eligibility change the moment you begin operating a business from residential premises, and workplace health and safety becomes entirely your responsibility. Add to that the fact that your home may no longer be covered by the EQC in a natural disaster, and also that you are responsible for the health and safety of any employee working out of their own home, and suddenly you have a lot to think about!

Not to worry. To help you get started, we’ve broken down a few of the major insurance and health and safety considerations for home-based business owners.

Insurance considerations

If you run a home-based business, your household insurance doesn’t automatically cover your workplace or assets. This is because the running of a business from a residential property will often change the likelihood of an event occurring that you may want to claim insurance on.

Your insurance provider will consider:

  • The type of business you are operating
  • If customers or clients come to the home
  • Whether business signage creates a target for theft
  • Business materials stored in the home (for example, some materials may present a fire hazard)
  • The security system and fire protection you have in place to manage any of the above listed risks

Based on the assessment, you may be only partially covered, or not at all, and you will need to purchase business specific insurance.

Types of insurance to consider:

  • Liability insurance: Your personal contents liability insurance will exclude liability for business-related events
  • Asset insurance: Personal insurance may cover some tools but may not be sufficient
  • Commercial motor vehicle insurance
  • Business interruption insurance

EQCover for businesses:

The Earthquake Commission (EQC) provide EQCover, which is the New Zealand Government’s natural disaster insurance product for residential buildings and land. Your personal home and contents are automatically covered if you have a private home or contents insurance policy that includes cover for fire.

If you run a business from your home, your EQCover may be affected. If you operate your business from a stand-alone building (such as a detached shed) on your residential property, this building will no longer qualify for EQCover. If you operate out of the main house and use more than 50% of the floor area for business purposes, the commercial component of the building will also be ineligible for EQCover.

Discuss your personal home-based business situation with an Insurance Advisor to find alternatives to EQCover if necessary.

Always disclose your home-based business

Not disclosing that your home is used to conduct business constitutes fraud (for example, neglecting to disclose that you rent out a spare room on AirBnB) and may result in your policy being cancelled, or claims being denied. Always ensure that you accurately disclose any business activity occurring in your residential home.

Seek the guidance of an Insurance Advisor

To help you work out what insurance you need to take out to cover your home-based business, seek the guidance of an insurance advisor and check out this guide to business insurance from the Insurance Council NZ.

Health and safety considerations

Health and safety in the workplace is taken extremely seriously in New Zealand. As a home-based business owner, you still have an obligation to ensure that your workplace is safe, even when it is your own home. There are two steps to considering health and safety in your home-based business:

  1. Identify and understand what your work-related health and safety risks are
  2. Eliminate or minimise those risks (called proportionate risk management).

Looking after your staff

If you employ staff who work remotely for your business in their own homes, the health and safety of their home-based work environment is still your responsibility as an employer. Here are some things to consider in helping you assess and manage the health and safety of your remote staff:

  • Provide them with safe equipment
  • Provide information on an ergonomic desk setup
  • Ensure they keep in touch with the boss or team members in case of an emergency
  • Train them in emergency procedures
  • Ensure they have suitable first aid equipment and supplies
  • Set specific times for them to regularly contact you or their team to check in

Looking after yourself

In order to take care of your own personal home-based workplace health and safety, you should consider and implement the suggestions listed for employees above. Another consideration for those who are self-employed or contractors is ACC levies.

If you’re self-employed or a contractor and can’t work because of an injury, you’re automatically covered by ACC’s CoverPlus. That means ACC pays you compensation at up to 80% of your taxable income for the most recent financial year.

If you’re concerned that level of cover wouldn’t be enough should you be injured and unable to work, you could choose to change to CoverPlus Extra. CoverPlus Extra gives you the opportunity to dictate how much of your income you want ACC to cover, and will therefore affect the levies you pay.

Learn more

To find out more about managing work-related risks, check out these guides:

WorkSafeNZ: Managing risks Insurance for home based business Running a business from home

Insurance Council of NZ (ICNZ): Your first guide to business insurance

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