There are a host of benefits that come with choosing to start and run your new business from home. This includes perks such as not needing to pay for office space and an extremely short commute to the office, amongst other things.
This being said, it’s not as simple as just setting up shop at home and not considering the legal side of things. Specifically, you need to be adequately insured. As there are so many types of cover out there, in this article we look at some of the options you should research as a potential home-based business owner.
When Do You Need Home-Based Business Insurance?
It is essential that you have business insurance in place at your home if:
- you have business-related guests visiting your property more than once a month
- you have paying guests staying at your property
But for peace of mind, for safety and likely for your financial benefit, there are many other reasons you can opt for certain types of business insurance. And dependant on the business you are running, you may legally need to have a certain level of insurance in place.
The Types Of Insurance You Should Consider When Running A Business From Home
Here we lay out some of the different policy types worth considering when running a business from home.
- Professional Indemnity Insurance (PI)
Professional indemnity insurance covers you in the event that you make a mistake or provide inadequate services or advice while working with a client. This is an important type of cover to have, and some clients will refuse to work with you unless you have it.
Claims that are covered include things such as libel and defamation negligence, breach of confidence or loss of information.
So, by taking out this form of insurance you'll be covered for the legal cost of defending your business against any claims, as well as for the compensation that may be owed to a client.
If you deal primarily in knowledge and skills, such as a consultancy service or a web design service for example, then this type of cover is advisable.
- Public Liability Insurance
Public liability insurance covers you if a customer or client suffers an injury, or has personal property damaged, as a result of coming to your business premises.
This can cover legal costs for defending claims as well as the cost to pay compensation awarded to a claimant if your business is found to be at fault.
This would likely be a good type of cover to have as an at-home hairdresser or nail artist. But even if this risk seems minimal, it may be worth considering. A customer who slips and breaks their ankle on their way into your office can just as easily make a claim as someone who got a wound on their head from some hairdressing scissors.
- Employers’ Liability Insurance
If you have employees working in your home, then this cover should be seen as a necessity to you. That’s because you are legally required to have employer's liability insurance for any full, part time or contracted staff at your property.
This type of insurance covers you if an employee is injured, gets ill, or has their personal property damaged as a result of working for your business.
- Buildings and Content Insurance
You should have buildings and/or contents insurance to cover your home anyway. However, your business equipment, such as your laptop or printer, won’t be covered under a home buildings or contents policy, so you need something more specialist for this.
You should speak to your insurer and check your home insurance policy provides cover for everything it may need to, such as items for “clerical use”. Providing as many business details as you can will help you to avoid any potential problems later on if you need to raise a claim.
- Product Liability Insurance
If you're running a product-based business, it's a possibility that an item you manufacture, sell, repair or repurpose with your brand name could cause injury or damage to someone’s personal property, and that is what Product liability insurance covers you for.
- A Comprehensive Business Policy
If you know what type of cover you need, there is nothing stopping you from discussing this with insurers to create a policy tailored to your requirements to pick and choose the cover you feel you need.
As every business has its own unique cover requirements, and business insurance policies are made up of the elements relevant to that specific business you may find that a comprehensive business may be a more cost-effective option than taking out a variety of separate policies.
Should I Start A Business From Home?
When it comes to choosing an insurance policy, it’s important to consider the level of cover you believe you'll need to give yourself and your clients peace of mind.
If you’re not sure how to define your home working situation, the best piece of advice we can give is to get in touch with your insurance provider. The gov.uk website is also a great place to find up to date information about running a business from home.
If you are looking at starting your own business at home and would like more information you can browse our company formation products or to get in touch with us. Please speak to us on our live chat or use our contact form. We are here to support your business formation needs in any way we can.