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Insurance for home-based business

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Consumers and business owners be warned. It seems there are insurance brokers who can do what they are paid to do – get you economical cover which will fix up any potential problems – and then there are brokers who can send you broke!

That happened in Melbourne when a bogus broker swindled $80,000 from 100 too-trusting people. They discovered they had very little legal protection and no cover.

Now I know many of us simply ring up an insurance company when we want to insure something. If you are really consumer-conscious or business smart, you’d ring at least a couple of companies before asking for a cover note.

Of course, contacting 10 insurers would give you the best idea of the going rates, but let’s face it, we’re all too busy, or as the modern term-makers would say, we’re all time-poor.

Well, you’ll be a lot poorer if you get insurance that’s way too expensive or deal with an ill-qualified broker. Of course, a good broker would have all the latest premiums per policy and would be able to advise you about the different policy pitfalls. For example, some insurers are cheaper, but are genuine shockers when it comes to repairs.

Be careful of going over the top with insurance, but be more concerned about under-insurance. One of the greatest blues we make when setting up a business at home, for example, is we think our domestic insurance covers us – generally, it doesn’t!

Have plenty of fears if you’ve ignored this crucial insurance area as lots of things can go wrong in a home-based business which can be made less troublesome via proper insurance.

Just imagine some ‘low-life’ breaks in and steals your computer, fax machine, etc. and you haven’t told your insurance company about the business. Your insurers might say they are insuring a home and its contents and decline your claim. And what if you’ve lost all information stored on your hard disc and have no back-up records for clients and tax purposes?

A fire could create similar havoc. If you fall into this category, check your current home and contents polices. Most will only cover a limited amount of business equipment and certainly not the expensive gear which can accumulate with an evolving home business.

A separate business policy might be needed. Clearly, it must be checked out. Also, an office insurance policy can help in the cost of rebuilding your data bank if it was lost.

So the message is:

  • Cover yourself properly especially if you’re running a business from home
  • Shop around for the best deal
  • Always check that any broker is registered and qualified.

By law, a real insurance broker must be licensed by the Australian Securities and Investments Commission, so you can check with them on 1300 300 630 if you need to.

Need help with your business? Book a free business assessments with Switzer Financial Services today. 

Published on: Tuesday, March 16, 2010

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