If you are thinking about starting a business from your home, or if you already run a business from home, you need to consider your insurance cover very carefully. If you think you can rely solely on your home insurance policy for cover, think again as you could find yourself underinsured if you ever need to make a claim.
Running your own business can be extremely fulfilling and can provide invaluable life experiences that you may not get from working as a full-time employee. Since the financial crash of 2008, there has been an inextricable rise in the number of entrepreneurs leaving their full-time employment to pursue their passion and start their own business.
Some have followed their entrepreneurial yearning because they have become disillusioned in their full-time jobs because of cuts to departments and budgets; others simply want a better work/life balance.
One thing that has come to light is that many of these budding business owners are neglecting to protect their businesses adequately. This could be because they are unaware of the perils of business (until it’s too late) or because they don’t realise there are relatively inexpensive ways they can insure against those perils. For finally because they think they don’t need protection working from the safety of their home office.
One of the key issues that immediately comes to mind is the visit of clients to your home office. These meetings may seem like no more than an innocent chat over a cuppa to discuss plans for your next commission or to discuss how your most recent commission was received. But what happens if one of these meetings is during a period of cold, wet weather, and your client slips on your garden path and hurts themselves?
You’d be very apologetic and attentive; it’s only natural to see that your client is okay. Your client then goes on their way and you think no more of it. Then a few days later, you receive a letter from a solicitor to say your client is issuing a public liability claim against you for their injury.
This is when you could experience a problem if you rely solely on your home insurance for protection, as your policy may not respond to the claim leaving you with a potentially hefty bill to pay. The following are insurance policies you should consider to protect your home-based business. They are also relevant to businesses of all sizes, whether they are home-based or office-based.
Public Liability Insurance
This policy covers you for the cost of a public liability claim from a third party, such as a member of the public (not an employee), that has suffered injury or property damage caused by you or your employees in the course of your businesses activities.
It can cover legal costs for defending claims and pay compensation awarded to a claimant if your business is found to be at fault. It will provide you with peace of mind that your business is covered.
Professional indemnity insurance (PI)
Professional indemnity insurance (PI) is designed for anyone who provides advice or offers a professional service or designs to clients, which are common for a lot of home-based business owners.
It will cover legal costs and expenses incurred in your defence if you are alleged to have provided inadequate services, advice or designs that have caused your client to lose money.
Business interruption
Provides cover for lost revenue if your business needs to close due to fire, flood or burglary damage at your home. Building cover and business interruption could be the difference between you staying in business and having to close it in the event of an unfortunate occurrence.
Contents and stock
Certain types of businesses retain a lot of stock on-site, thus need a stock insurance policy or a comprehensive business contents insurance policy to mitigate risk. This type of cover provides up to £50,000 of cover for the cost of replacing equipment, furnishings, or food and drink that is damaged or stolen. For example, if you run a crafts business from your home, this policy could be ideal for you.
Goods in transit
Cover for goods deliveries that are lost or damaged while in transit.
Legal expenses insurance
Legal expenses insurance provides you with cover (in any one claim) for legal representation costs in the event of a tax investigation brought against you. This type of cover goes much deeper than that and will provide you with cover for the expenses you incur if you are called-up for Jury Service or a legal proceeding.
