More small business owners are working from home than ever; many of the lifestyle changes people made during COVID have stayed in place – just as they have for traditional workers.
However, one thing that many people don’t think about with their home-based venture is insurance. Existing house insurance policies are designed to cover domestic arrangements, and may actually be invalidated by you working at home.
It’s no wonder that so many businesses are now run from home. Starting a new business can be expensive, so setting up a new enterprise from your own home avoids the need to pay for office space, plus all of the associated costs.
But running a business from home may invalidate your home insurance policy. To help avoid potential problems, use this guide to check that your home-based business has all the business insurances required by law and that you don’t get a nasty surprise when you try to make a claim.
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 until 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.
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 though!
Many domestic policies cover teleworking – where you have a job but sometimes work from home – but may have restrictions on assets owned by your business. Again, it’s best to check your existing policy and notify your insurer if you are in any doubt.
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Public liability insurance
Regardless of the type of business you operate, there are compelling reasons why you should consider taking out public liability cover if anybody is likely to visit your home for a work-related reason.
The business insurance market is competitive, and for a few hundred pounds per year, you can work safe in the knowledge that you will be covered in the event of a claim – both for damages and legal costs.
You will find that the monthly or annual premiums you have to pay will be dependent on the type of industry you are in, and your annual turnover.
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 (subject to several notable exclusions – such as if you’re running a family business) and your business will be fined if you don’t have it.
Employer’s liability insurance gives you and 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.
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Check your car insurance
Another detail often overlooked by people starting a business from home, is whether their car insurance allows them to drive on business matters. Some 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 during your lunch break to be a business journey. And that could potentially leave you uninsured. Play it safe and add the cover.
Did COVID-19 affect your home insurance cover?
For obvious reasons, the current COVID-19 situation massively increased the number of homeworkers.
Fortunately, the Association of British Insurers (ABI) confirmed that anyone forced to work from home during the pandemic did not have to change their home insurance cover.
Now things have returned to normal, however, you should check your policy to make sure that the terms and conditions allow you to run a business from home.
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