RANDS AND SENSE
By Clayton Ellary
The pandemic has shaken up the world of work across the globe with the work-from-home and gig-economy phenomena becoming increasingly viable and popular.
Many companies have opted for a hybrid work environment, where employees work from home and the office on an alternating basis. Many individuals have also joined “the great resignation”, taking the leap to become self-employed freelancers.
This warrants a closer look at how your insurance portfolio is structured and whether your assets and liabilities are covered under a personal or business insurance policy.
To unpack how insurance will respond in a work-from-home and gig-economy environment, we need to take a step back and make a few distinctions that fundamentally determine how your assets used in a work context should be insured for loss or damage.
Full-time employee or self-employed?
The first distinction to consider is whether you are a full-time employee of a company that is working from home, or if you are self-employed and thus directly responsible for insuring your risks.
A full-time employee would generally enjoy the benefit of their employer having insurance for business-owned equipment and liabilities. It means that items such as laptops, phones, printers, stock and even office furniture that are provided to you for purposes of conducting your work and duties would be covered by the employer’s business’ insurance.
In saying that, it is important to check with your employer that your work assets are covered outside of its business premises, and what the terms and conditions are of cover. It may be a case of having to specify these items under the policy’s all-risks section. If, however, you are using some of your personal items for work – say, for example, your own cellphone – and the company simply pays for your airtime and data, then your mobile device would need to be insured under your personal insurance policy, since ownership of the device resides with you, and not your employer.
If you are self-employed, then insurance cover for your business activities and business assets is your responsibility, and may require the cover provided under a commercial business policy catering to the needs of an SME. While your business may be based at home, the risks it faces are very much in the business realm and you would need to consider assets cover, business all risks cover, motor insurance, liability cover, cyber risk and goods in transit cover as just some examples.
Your personal homeowner’s and contents insurance will typically not provide cover for business activities or business-related assets. This means that any items that you are using at home, or services you are providing from home, that form part of your work and income generation, or any risks from a liability point of view, need to be covered under a commercial business policy.
Consider, for example, a dietician or physiotherapist who conducts their business from a home office. If a paying client has a slip-and-fall accident at the premises, and holds you liable for the damages, your personal homeowners insurance will not cover you, since the incident occurred in the context of your business activities. You would need cover under a commercial business policy that is designed to cater for the specific risks related to your profession, business and operating environment.
The best approach would be to discuss your small business risks with an expert broker who will be able to provide you with options and scenarios that will allow you to make better-informed decisions and provide a clear distinction between your business and personal insurance requirements.
The gig economy
Nowhere is the changing world of work more apparent than in the emerging gig economy, which is characterised by freelance, flexible, on-demand work. As the gig economy gains momentum, many businesses are opting to utilise specialised skillsets on a project-to-project basis from freelancers or sub-contractors. While it affords a business the ability to use specialised skills without having to commit to aspects related to long-term employment, there are some inherent risks that the business may face that need to be considered.
It doesn’t matter whether the work is performed by a full-time employee or an individual contracted through a work-on-demand platform, your business remains liable for the quality of work delivered, non-delivery, professional liability or any cyber-related risks. It is important to investigate the related risks and to check whether your business insurance covers are sufficient, especially from a liability point of view.
It is also important to note that individuals who operate within the gig economy technically fall under the “self-employed” banner of risk, which means that any insurance for activities performed within the gig economy is their personal responsibility.
A good example is someone using their personal vehicle in a work or income-generating capacity – for example, as a passenger transport provider or doing deliveries for an online retailer or courier company. It effectively takes the vehicle out of the personal sphere of insurance cover and places it in the business insurance space, where you need to consider commercial vehicle insurance, passenger liability covers and possibly even goods-in-transit cover if transporting high-value items and stock.
There is simply no one-size-fits-all approach to risk and insurance for your small business. It all depends on the nature of your business and its unique levels of exposure. In this regard, consulting with a professional risk advisor is an invaluable exercise in assessing your exposures and protecting your assets and potential liabilities and whether these fall under a personal or commercial insurance policy.
Clayton Ellary is commercial branch manager at Aon South Africa.