2.1 million businesses are run from home according to research and 60% of new businesses are started at home – that’s 1,400 a week.
And no wonder. Starting a business is hard enough; when you do it from home you immediately remove a large layer of cost and risk. You can use existing rooms, computer, electricity, phone and internet access.
One thing that many people don’t think about with their home-based venture is insurance. Existing house insurances are designed to cover domestic arrangements, and may actually be invalidated by you working at home.
Use this complete guide to check that your home-based business has all the business insurance required by law and that you don’t get a nasty surprise when you try to make a claim.
Buildings insurance
This is a policy you most likely took out when you got your mortgage. It helps to cover the costs of repairing or rebuilding your home if it is damaged or destroyed.
It is very much worthwhile contacting your insurer to notify them you will be running a business from home. While most businesses shouldn’t have any effect on the cover or cost of it, if you are smelting molten metal in your garage, your insurance company may rightly see that as a greater risk!
A general rule with insurance companies is that it’s better to tell them facts up front rather than wait till you come to make a claim. The last thing you want is for them to withhold payment on your fire-damaged house, because you didn’t reveal what they consider to be a material fact.
Contents insurance
Running a home business is much more likely to affect your contents insurance. Your insurance company is going to be concerned with what equipment you have in your house for the business, including extra computers (they will probably overlook the advantage of having you home all day, reducing your burglary risk!).
Many domestic policies cover teleworking – where you have a job but sometimes work from home – but may have restrictions on stuff owned by your business. Again, it’s best to check your existing policy and notify your insurer if you are in any doubt.
Public liability and professional indemnity
No matter what kind of business you operate, it makes a lot of sense to get public liability cover and professional indemnity insurance. For just a few pounds each month you are buying peace of mind that if there is a legal claim made against your business for whatever reason, you will have someone on your side who will also pick up the cost of any award and often the legal costs too.
The cost of a policy depends what kind of business you are in (or actually what kind of risk it poses to the insurers) and your turnover. When working from home you should ensure the policy covers any potential claims in your house. What would happen if a client visited you at home and fell down the stairs – check you would be covered.
Employer’s liability Insurance
If you take on your first employee while running your business from home, you will need to get employer’s liability insurance. It’s required by law and your business will be fined if you don’t have it.
Employer’s liability insurance gives your employees peace of mind that if they have an accident at work – which in this case is your home – or fall ill because of something at work and it affects their ability to earn money; your insurance policy will compensate them.
Check your car insurance
One thing often overlooked by people who start a business from home is whether their car insurance allows them to drive on business matters. Many comprehensive policies include this as standard, but if it’s not specifically mentioned on your policy you’ll need to get it added.
The reality is that even if you don’t plan to use your car for business, your car insurer may consider you driving to the Post Office in your lunch break to be a business journey. And that could potentially leave you illegally uninsured. Play it safe and add the cover.
Where do you get specialist home-based business insurance from?
Hiscox are a specialist business insurer and offer a wide range of business insurance such as public liability, professional indemnity and employer’s liability.
