Why homeworkers need business insurance
The last few years have seen a huge rise in the number of people setting up business from home, and even more employees have been accustomed to home working because of the COVID-19 pandemic.
With many people made redundant or furloughed, more people are choosing to set up their own business, around 500,000 businesses in fact.
While working from home reduces commuting costs and improves flexibility for business owners, thousands of home-based businesses are operating without vital homeworkers insurance that could save them from financially crippling payouts in the event of a claim.
Am I insured to work from home?
Usually, your home insurance will cover you if you’re working from home and you’re employed by someone else. A standard home insurance policy is likely to cover home office equipment, including your computer, laptop and printer, however it’s important to check your policy details to ensure this is the case. You may find that more expensive items (e.g. more than £1,500), need to be declared in your insurance policy, though this can differ from insurer to insurer.
However, when you’re working from home and running your own business, your standard home insurance policy is unlikely to cover you cover you.
Does working from home affect house insurance?
Working from home when you’re employed by someone else generally won’t affect your home insurance, as long as you don’t purchase lots of additional equipment or items that could increase the value of your home’s contents. When you purchase additional items, the amount you’re covered for may need to be increased and, in some cases, declared separately in your policy.
No matter who your provider is, you should contact them to let them know about your change in circumstances.
Where you are using equipment that is owned by your employer, such as a work laptop, this will usually be covered on their business insurance, but you should check with them to ensure you do not need to insure it separately.
Do I need business insurance to work from home?
You should consider business insurance if you work for yourself from home. This is specifically the case when you have visitors to your home for business purposes, you make or store goods at home or you offer services from your home (such as beauty treatments or consultations).
When any one of these things apply, it’s important that you have business insurance, such as public liability, professional indemnity or business equipment insurance, instead of relying on your home insurance.
What are the common misconceptions about homeworkers insurance?
Below, you can find five common misconceptions about running your own business from home that could highlight how important business insurance is for homeworkers.
"Home based businesses aren't big enough to need insurance."
Regardless of the size of your business, without the right insurance cover, you could be exposed to financially crippling payouts if something doesn't go to plan. Professional indemnity insurance can provide cover for mistakes you make in your work, such as incorrect advice you provide to your client, and public liability insurance can cover against damage or injury you cause to third parties. Generally, both are regarded as vital cover for new and growing businesses.
"Household insurance policies cover home businesses."
Home insurance policies rarely include cover for mistakes made in work for a client or damage caused to a client's property, and they don't always cover expensive business equipment (such as laptops or mobile phones) against accidental damage or theft. Arranging specialist homeworkers insurance may cover your business against these eventualities.
"Homeworkers don't need insurance to be awarded large contracts."
Most organisations want proof of insurance so that, if things go wrong, they can reclaim any losses. Therefore, it is common practice for new customers (particularly public sector organisations) to request proof of insurance before a contract is signed. Without insurance in force, you could struggle to win important contracts.
"Home-based businesses can survive interruptions."
An unforeseen event at your home could cause chaos for your business, whether it's a flood, fire or other disaster. While your household insurance policy might cover the costs of repairing your home, what would happen to your business? Arranging business interruption insurance can cover your business against loss of income (or an increase in trading expenses) if something unexpected happens and you can't work from home.
"If I employ a part-time member of staff, I don't need employer's liability insurance."
If you employ any staff, regardless of whether they work part time, full time, from an office or from their own home, employer's liability insurance is a legal requirement. Without it, you could face a fine of up to £2,500 a day. As with all insurance, read the policy terms and conditions to make sure the cover is right for your business.
Markel Direct offers policies specifically designed to cover home-based professionals, homeworkers and home businesses. A range of covers are available, including professional indemnity, public liability and business interruption, with premiums starting at just £5 a month. Find out more about our homeworkers insurance or get an online quote in 90 seconds.