There are lots of benefits to working from home if you run a business – you’re not paying for separate business premises, you’re not spending time commuting and you can easily work at any time.
Wherever you run your business from, however, you should still think about whether you need business insurance to protect your home as well as your business if something goes wrong. Read on to find out about the different types of policies that could be worth taking out.
There’s a range of business insurance types you might need whether you run your business from home or not, as the same risks apply regardless of where your business operates from. Here are the main ones to consider:
Public liability insurance – this protects you if you cause injury to members of the public or damage their property in the course of your work. It will cover the cost of any compensation you need to pay them.
Product liability insurance – if you design, make or supply products to customers, this protects you if someone is injured by one of your products or it causes property damage.
Professional indemnity insurance – this gives you protection if a customer makes a claim against you for providing negligent services or advice. It will pay for compensation to make up for the financial loss they’ve suffered.
Employers’ liability insurance – if you employ staff, by law you need to have employers’ liability insurance in case an employee is injured, becomes ill or dies through working for you and claims for compensation. It also usually covers the legal costs involved.
Personal accident insurance – this pays out if you – or one of your employees – have an accident and can’t work. You either get a regular amount if you can’t work temporarily or a lump sum if it’s permanent.
Business interruption insurance – if you can’t operate your business as normal because of an unexpected event – essential equipment breaks down or there’s a problem with your supplier, for example – this insurance covers you for the loss of income and any extra business costs you have to pay as a result.
Goods in transit insurance – this covers you if goods you supply or transport are lost, stolen or damaged on their way from one place to another, whether you deliver them yourself or use third parties to do so.
Business motor insurance – if you own a van or other vehicle for your business, you’ll need at least third-party insurance in case you’re in an accident. You also need to take it out on any company vehicles driven by your employees. Read more about van insurance.
To find out more about working from home insurance options, read what insurance you might need for your business.
As with any business, only employers’ liability is legally required if you have employees. If you don’t have it, you could be fined £2,500 for each day you’re not properly insured. You could also be fined £1,000 if you don’t display your employers’ liability (EL) certificate or don’t make it available to an inspector when required.
You must be covered for at least £5 million and buy it from an authorised insurer. You might not need EL insurance if you only employ family members or people who live abroad. Visit Gov.uk to find out more.
The only other type of insurance that’s legally required is third-party motor insurance if you have a vehicle you use for your business.
You may already have buildings insurance in case your home is damaged by fire, floods or storms (you’ll usually be required to have it as a condition of your mortgage if you have one) and contents insurance to cover the cost of replacing your belongings if they’re damaged or stolen.
Whether your existing home insurance will cover you if you run a business from home depends on the nature of your business. Factors that will affect whether you’re covered or not include whether you have customers or anyone else visiting your home for business purposes, whether you have specialist equipment or stock at home and whether your business involves just clerical work or other things too.
Yes. If you work from home for your business, you should tell your home insurance provider and find out whether you’re still covered by your home insurance or not. As every insurer and situation is different, this is the only way to find out for sure, and you could invalidate your insurance by not disclosing it.
You should also tell your insurer if you work from an outbuilding on your property to make sure it and its contents are covered.
Your existing insurance may cover you as it is, you may be asked to pay more to extend your cover or you might have to take out specific business insurance.
If your insurer thinks you’re riskier to insure because you run your business from home than someone who doesn’t, your insurance will cost more. It’s likely to be more expensive if you hold stock at home, have valuable equipment or get regular visitors for your business.
If you have employees you’ll have employers’ liability insurance and this should still cover you if your employees work from home. However, you should speak to your insurer to make sure. If your policy doesn’t cover home working, you can ask for it to be added.
Your home buildings and contents insurance might not cover damage to your home or damage or theft of its contents if you have paying guests staying through a service like Airbnb so you should check this with your insurer. Some offer an add-on to your existing insurance so you’re covered.
Home insurance usually covers you if someone visiting your home is injured or their property is damaged and you’re liable but, again, check with your insurer that you’re covered for paying guests. Airbnb provides its AirCover for Hosts insurance policy for free, which includes cover for damage to your home and belongings, and injury of guests or damage to their belongings. Other similar services may not offer this level of protection, though.
Your office equipment, such as computers and printers, may already be covered under your existing home contents insurance but you may need extra cover for other items, such as valuable machinery or other equipment you have to run your business.
As always, however, check with your insurer. If you need to claim and find that you don’t have cover or you’ve invalidated your insurance by not disclosing something relevant, you could have to pay a significant amount yourself to repair or replace the items.