01 May How to insure your home business
Working from home doesn’t give businesses a free pass when it comes to insurance. A Steadfast broker can help you select the cover you require.
Working from home is becoming more common as technology makes it less important for people to cluster together in a central, physical location. As lots of enthusiastic converts will attest, working from a home office has all sorts of advantages. But not having to worry about business insurance isn’t one of them.
”If you use a broker, you have a better chance of arranging the right cover.”
Is it a home or office?
To start with the obvious, once you start working from home, it becomes a place of business. That can impact on your existing home building and contents insurance. You’ll need to contact your existing insurer and check if your ‘tools of the trade’, such as a desktop computer, are covered and, if so, up to what monetary amount. Be warned that a standard home and contents policy usually won’t cover any stock you have stored in the spare room or garage.
“You need to think about every aspect of what your business does,” advises John Clark, Broker Support Manager for the Steadfast Group. “Including whether you have products or equipment on site which, if they are damaged or destroyed or stolen, could affect the operation of the business.”
There are various types of insurance that are recommended for any business who has staff, customers or suppliers coming onto their premises, uses a vehicle for work purposes, or employs staff. “You’ll need to do a risk assessment and put the appropriate policies in place,” Clark says.
A form of insurance many home-based businesses should think about but often don’t is public liability. If staff, suppliers or customers ever visit your house or apartment, you should have it (the more visits you host, the more chance there is of something going wrong and the higher you can expect your premiums to be).
If you employ staff, workers’ compensation is mandatory, regardless of where you or your employees work. You’ll also need compulsory third-party insurance on any vehicle used in the business.
Finally, if you’re a professional who provides advice or a service to your customers, you should have’ professional indemnity insurance (even if you’re dispensing advice or service via a laptop while sprawled on the living-room couch in your pyjamas).
Practical insurance advice
To illustrate how home-business insurance might work in the real world, Clark contrasts the circumstances of three separate businesses.
- Person One is working from home on a computer.
- Person Two sells cakes she bakes at home.
- Person Three sells items on eBay, with $20,000 worth of stock stored in her home office.
None of them are employees.