Starting a business from home: What insurance do you need?
A handy guide on how to choose the right insurance packages that are tailored to your home-based business
Many businesses can be started from the comfort of your own home. From computer repairs to catering, web design to craft businesses, all manner of start-ups can get up-and-running with nothing but domestic premises as a base.
However, it’s important to remember that although you may be able to start work with your cat on your lap and a cup of tea in hand, there are still a number of important things for home workers to take into account.
When it comes to insurance, many insurers can provide packages tailored to your home-based business. Here’s a look at the key types of insurance cover you should consider:
When considering a home-based business, you will need to check your home contents insurance policy carefully, as it’s likely this will need to be amended or replaced to cover your business equipment. It’s best to be as open as possible with your insurer; give them the lowdown on what you’re doing and any business equipment that’s helping you do it.
You can also opt to cover items you may take out of the house, such as your laptop, your mobile phone, or your top-of-the-range hedge strimmer. Providing as many facts at the beginning of the process as possible is the best idea, and will help avoid problems later if you need to make a claim.
It’s also worth thinking about your home buildings insurance. Take a look at your policy and see whether it’s worth combining cover for your home and your home office. Some insurers offer policies which cover home and home office in one, to protect your domestic premises from damage caused by something like a fire or flood. This means that it may be cost-efficient to cancel your normal buildings insurance and incorporate this cover into your business policy.
Professional indemnity insurance
Whether you’re running a beauty salon from your front room, or a computer repairs service from your spare bedroom, it’s likely that professional indemnity insurance will be a key cover for you. Clients will often want to check that this is in place before they work with you, as it pays out for claims of negligence or for poor advice.
Working from home is not much different to working from business premises when it comes to this kind of insurance; compensation can be very pricey, and it’s best to be covered. For freelancers, this kind of cover can be particularly useful, as services frequently provided by freelancers, such as consulting, are particularly susceptible to such claims.
Public liability insurance
It can be easy to overlook the need for public liability insurance if you’re self-employed or working from home, but it’s actually a policy you should think carefully about. It will be necessary if members of the public or customers come to your place of work, or if you go to theirs.
For example, if you ran a mobile hairdressing business and a client’s scalp was burned during the dyeing process, you would be covered for any compensation sought. If you ran a photography business from a home studio, and a client tripped over a wire during a session, you would be covered for potential compensation claims. Usually, this is an important but optional insurance, but if you run a horse-riding business then public liability insurance is compulsory.
Employers’ liability insurance
Wherever you are working, if you’re planning to take on employees you are usually legally required to have employers’ liability insurance. There are some exceptions to this rule: if the person you are employing in your home-based business is a closely related family member such as your spouse, parent, child, or sibling, then you won’t need this cover.
As you can see, the right insurance cover is going to be important for working from home. Here are some pointers to get you started:
- Look at your home buildings and contents policies, and consider updating or replacing them to include your home office and business equipment. If you leave home with your equipment, make sure that this is covered too.
- Carefully consider professional indemnity insurance, especially if your home-based business offers professional advice. It may be worth finding out what level of cover your clients expect.
- If clients or customers come to your home or if you visit theirs, public liability insurance is probably a good idea.
- Remember that the law requires you to have employers’ liability insurance if you have any employees, even if you work from home. You may be fined if you’re found to be lacking it.
- Travel insurance or upgrading your car insurance may be necessary if travelling will be part of your work.
- As always with insurance, be as full and honest as possible when giving initial information, to avoid any issues if you come to make a claim. For contents insurance, keep receipts when you purchase items so that you can give an accurate value.
Add insurance to your tick-list for setting up your own business at home. It should be one of the first things you consider when you’re planning to start a home-based business, along with other tasks such as notifying HMRC and informing your mortgage provider or landlord. Once you’ve got everything in place, you can start enjoying the many benefits of running your business from the comfort of your own home, slipper-clad if you so choose.
Jade Wimbledon is a writer for business insurance specialist Simply Business, which offers insurance packages tailored to home-based businesses and freelancers.