Do You Need Business Insurance if You Work From Home?

With around 2.1 million businesses run from home in the UK, and an estimated 1,400 created every week, there's no denying that it's a popular and economical way of starting out on your own.

But whilst working from home has some great advantages, there are some important aspects that many overlook. One of these is the need for separate business insurance to cover things from office equipment to stock. Many home-workers assume that all their business related equipment and activities will be covered by their home insurance policy but this is designed to protect your domestic space and personal items only. In fact, failing to inform your home insurance company that you are conducting a business from your domestic premises could leave your entire home uninsured.

What’s more, if your home-based business employs at least one member of staff in addition to yourself, you’re required by law to take out employer’s liability insurance. Whether or not you have any employees, business insurance that is designed to protect your commercial assets and equipment is still important. Home contents insurance is rarely suitable even when extended and the potential losses from being under-insured should the worst happen could end your new venture before it’s had chance to get started.

What Business Risks Might You Need to Cover?

There are several different types of business insurance that might be applicable to your home-based enterprise depending on the type of operation, the value of your assets, and other factors.

• Office contents and computer equipment: Limits for cover range between £7,500 and £20,000 depending on factors such as the value of your business and the insurance company you are insured with.
• Stock: You can insure stock held in your home for up to £1,000 (higher amounts may be available if you make the request to your insurer).
• Portable items, including laptops, mobile phones, and PDAs, can be insured for a maximum cover of around £1,500.
• Business interruption insurance applies in cases where the normal flow of business is interrupted. This will apply where your business cannot function normally. This typically has a limit of around £10,000 depending on your insurer, and can cover lost wages or revenue, and increased costs of business operation that might result.
• Public and employer’s liability insurance provides you with cover in case any member of the public, or an employee, makes a legal claim against your business. Limits may be around £2 million for public and £10 million for employer’s insurance. (Note that if your business employees at least one person in addition to yourself, employer’s insurance is required by law.) Public liability cover is needed if your clients or customers enter your home for business reasons.

Check Your Existing Insurance

Regardless of the type of commercial insurance you choose, it’s also a good idea to give your home insurance company a call and let them know you’re operating a business from your home. In most cases the existence of a small, office-based business won’t affect your existing home insurance premiums, but if your business involves an activity that increases fire risk, for example, your insurer may adjust your premiums. If you withhold or fail to declare this information, the insurance company may void the policy and decline any claims.

Check your car insurance too, and find out if it allows you to drive your car for business purposes.