What Is Home Business Insurance, Do I Need It?
When you start your business, you may wish to work from home, either because it's easier for you, or for cashflow reasons. However, you may need to consider taking out home business insurance.
There are multiple types of business insurance, and it can be difficult trying to figure out which one you need. This post talks you through things to consider when you're looking at taking out a policy.
Why do I need insurance?
Many small business owners believe that they don't need special insurance if they're running their business from home - this may prove to be a costly mistake to make. If you have regular business insurance and don't inform the provider that you're working from home, it can invalidate your policy. Also, standard home insurance may not cover you for running a business, for example, if a client injures themselves at your home, or if stock goes missing from your garage you may not be covered.
This is where home business insurance can come into play. Usually packages offered are flexible so that you can choose the level of cover that is right for your business, sector and level of cover required. But how do you know what you need?
Which type of insurance do I need?
As we touched upon earlier there are different types of cover which are offered at different levels, so let's look at these a bit further.
Employers' liability insurance and public liability insurance
A legal requirement if you employ someone, even as a volunteer, is that you need to have employers' liability insurance. This ensures that you can pay compensation if an employee becomes ill or injured as a result of working for you. There is a minimum coverage of £5 million and you can be fined up to £2,500 for each day that you are not covered. If you need to take out a policy, you need to make sure it's displayed clearly at your premises. Of course, this doesn't apply if you're a sole trader and don't employ anyone within the business.
If you have customers or other visitors coming into your home for business purposes, you may wish to take out public liability insurance. This covers any legal expenses and compensation you may face if someone is hurt or suffers damage to their belongings at your premises, or because of something that you do.
This can be a key policy that's useful for many businesses and is designed to cover the costs of repairing or replacing any equipment or furniture that has been damaged or stolen. Where appropriate, insurance for stock and tools essential for your trade can be wrapped up into a single business contents package.
If you travel for business, it may be advisable to extend your policy to include portable equipment such as laptops, tablets or mobile phones.
Product liability insurance
This depends on the nature of your business and deals with specific issues deriving from the product or service that you offer. If you sell anything tangible, it covers you if a customer becomes ill, is hurt or experiences harm after using your product.
Professional indemnity insurance
This protects you if clients claim they have suffered damage as a result of mistakes that you have made. It covers your legal expenses and, if applicable, compensation costs.
If your business takes a lot of cash or cheques, you may want to have a specific policy that covers you against theft of takings.
If you rely on online payments or handle a lot of customer data you may require a specific cyber-crime policy.
Business interruption insurance
This can protect you from a drop in income you may experience if a major incident interrupts your business. For example, after a flood you may not be able to access your home office. This can be crucial in order to give you peace of mind.
So, what next?
It may seem like a lot of effort to go to just to run a business from home, but it's necessary in order to protect yourself from anything that may happen in your business. Remember that if anything was to happen, you would have to pay for it yourself if you didn't have insurance.
This post is to be used for information only and does not act as legal nor professional advice. Please consult a specialist before considering or purchasing insurance.
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