Kristina Fox
Juggling your personal and professional life can be difficult at the best of times, especially if you run a business from home. Mistakes and mishaps can happen but knowing you’re insured against some of the risks can give you peace of mind.
You may be wondering if you’re covered by an existing home insurance policy or whether you need separate business insurance on top. Below, we look at what home business insurance covers, how it’s different from home insurance and whether you should consider it for your home-based business.
What is home business insurance?
Home business insurance is a catch-all term for a package of cover designed to protect you and your home business in case something goes wrong. This can include injuries to you or your clients, theft or damage to stock kept at home, as well as cover if you were forced to stop trading for a period of time.
As with most insurance policies, a home business insurance package can be tailored to your specific needs, so you can cover what you think is most important and only pay for what you need.
» MORE: A guide to business insurance
What insurance can I get for my home-based business?
Similar to most other types of insurance policies, home business insurance usually comes as a package and is made up of a number of different common business insurance products.
A key part of many packages is public liability insurance. You may think this isn’t necessary for a home-based business, but if you had clients round to your home and they got injured, public liability insurance could cover their compensation costs if they made a successful claim against you.
In a similar vein, product liability insurance could protect you and your business if a client makes a claim for suffering injury or illness from one of the products you have manufactured, supplied, sold or offered for free.
In many professions, your clients are relying on your advice. For example, if you’re a consultant that works from home, clients will be asking for your professional opinion. If you were to make a mistake that resulted in your client losing out financially, they may raise a claim against you for professional negligence. Professional indemnity insurance could pay out for your legal costs to fight the claim, as well as covering the compensation your client may be owed.
If you’re working from home, you may have some tools or equipment such as computers, printers and phones. If they are for business use, it’s likely they won’t be covered under your home contents insurance. Depending on the type of business, you may want to consider business equipment cover or tool insurance, which can pay out for repairs or replacements in case of damage or theft.
Stock stored at your home for business use is also unlikely to be covered by your home insurance, so you may want to think about additional stock or contents insurance for this.
If your business is suddenly forced to stop trading for an unexpected reason, such as flooding or fire, you may face weeks or months without income. If you’re self-employed full-time, this could spell disaster. Business interruption insurance can cover some of the lost income if your business has to stop trading for a period of time.
Similarly, if you were to injure yourself at work or elsewhere, you could be left unable to work. Personal accident cover could pay you a weekly amount or lump sum that could help to cover some of the lost income during the time you’re out of work because of an injury, a lump sum for you if you have a permanent disability, or for your beneficiaries if you were to die because of your injuries.
Nowadays, almost every business has some connection with the digital world. And with that connection comes the potential for cyber threats. If a major part of your business is based online – for example, if you trade through a website or store customer data securely in the cloud – you may want to consider cyber insurance. This type of policy could pay out to replace infected hardware or to compensate customers affected by a data breach.
If you employ anyone, whether it’s just one casual worker or a team of 20, you need to take out employers’ liability insurance. It’s a legal requirement in the UK, and you could be fined £2,500 for each day you don’t have it. The only exceptions to this are if you employ your immediate family or someone who’s working outside the UK.
» MORE: Business insurance costs
Do I need home business insurance?
Although insurance for your home-based business isn’t always strictly necessary, there are various reasons why it’s worth considering.
Let’s imagine you run a cake-making business. If a customer tripped and injured themselves while collecting cupcakes at your home, or got food poisoning after eating an undercooked brownie, you could be liable to pay them compensation. An unexpected cost like that could have a significant impact on your business but with public or product liability insurance some, if not all, of the costs would be covered..
Equally, your business could take a hit financially if you were out of action for an extended period of time – if you broke your arm and couldn’t bake, for example. In this instance, personal accident cover could help to cover some of your lost income so you weren’t left out of pocket during this time.
That said, home business insurance isn’t required by law in most cases. The exception is employers’ liability insurance, which is a legal requirement if you employ anyone in the UK who is not a relative. You can be fined for not having it.
Things are different if you work from home as an employee rather than as self-employed. Though it’s a good idea to tell your home insurance company that you work from home, it’s unlikely you’ll need to take out a separate business policy if you’re employed doing office-type work.
If the equipment you use for work (such as a laptop) is provided by your company, you likely won’t need specific insurance for it as it will be covered by your employer’s policy. But if you buy any equipment yourself, you might need to tell your home insurer. It’s worth checking with your employer if you’re unsure.
» MORE: Do I need business insurance?
How much cover should I have?
How much cover is appropriate for your business depends on your specific circumstances. Home business insurance packages can be adapted to suit your needs, so you can often change the level of cover you want.
The only specific limit is with employers’ liability insurance, where you legally need at least £5 million of cover provided by an insurer authorised by the Financial Conduct Authority (FCA). In addition to these certain professional bodies could have minimum limits so you should check for any that may be applicable to your own individual profession.
» MORE: Is your business underinsured?
Is my home insurance enough?
Home insurance alone is unlikely to cover you for business-related claims, even if the event happened at your house. It is a good idea to look into a separate business insurance policy if you want to take out cover for your home business.
That said, you may be able to get extended home insurance that allows for certain business activities to take place at home. Either way, it’s worth talking to an insurer for more details about this so you can make an informed decision.
» MORE: Different types of business insurance
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