There are many wonderful aspects to working freelance. Sadly, buying insurance is not one of them.
However, it is essential to ensure that you have the right home business insurance so that you’re covered if something goes wrong.
As such, let’s dive in and take a look at the kinds of insurance you might need. Don’t worry, we’ll try to keep things as short and sweet as possible!
Working from Home: The Numbers
More and more of us are working from home. Doing so cuts out the need to commute, provides a working environment that’s comfortable and can result in far higher productivity levels.
Figures from the Office for National Statistics show that the number of people working in their own home as part of their main job increased from 884,000 in 2008 to 1,542,000 in 2018 – an increase of nearly 75%.
This rise reflects the fact that many entrepreneurs and solopreneurs have taken their destiny into their own hands and chosen a life of working from home.
It has also, no doubt, resulted in insurance companies rubbing their collective hands in glee at the thought of all those additional premiums that might be required. Let’s take a look and see what they entail.
What Does Your Home Insurance Cover?
If you have a standard home contents insurance policy, it will cover you in the event of the loss or damage to the items in your home. However, there are some exceptions to this.
For example, some policies will cover items such as laptops when they are used for ‘administration’ duties but not for ‘business or professional purposes.’ Others will automatically cover home office equipment but only up to a certain value (often £5,000).
Are You Covered Away from Home?
Using business equipment away from your property can be a tricky issue when it comes to home business insurance. Some policies will cover mobile phones and laptops, but only when they’re in the house – not when you’re out and about. For those who are based from home but have cause to work elsewhere at times, this can be an issue.
As a starting point, check what you’re already insured for and consider adding to it with an ‘all-risks’ policy that covers your business equipment. It will cost you a little more, but not nearly as much it would cost to replace the equipment yourself, should something happen to it.
Should You Tell Your Insurer if You Work from Home?
Yes, yes and thrice yes! Insurance companies have something of a reputation for finding ways to avoid paying out (whether deservedly so or not is perhaps beyond the scope of this article!). As such, it’s essential that you provide your insurer with any and all material facts that relate to the way you use your home.
If you work from home, let your insurance company know. If you store products relating to your business at home, let your insurance company know. If you meet clients or employees (if you have them) at home, let your insurance company know. You get the gist!
Failing to tell your insurance company that you work from home may result in it not paying out in the event of a claim.
Does Working from Home Affect House Insurance?
There’s no hard and fast answer to whether or not working from home will affect your house insurance. That’s because there are so many variables – what it is that you do, the nature and cost of any equipment and/or stock you keep at home, whether you have clients, employees or members of the public in your home as a result of your work…
The simple answer is that working from home may affect your house insurance, so it’s best to be clear on what you need and why. Our handy guide below should help you work this out.
Types of Insurance Cover for Home Workers
Working from home insurance comes in various shapes and sizes. As such, we thought it would be helpful to provide a quick run-down of the types of insurance that you may need.
This covers the items in your home against loss or damage. It may or may not include home office equipment and it may or may not cover the use of such equipment outside of the home. Its validity may be impacted by the storage of business-related hazardous or flammable materials in the home.
This covers the physical structure of your home against damage caused by caused by fire, floods, storms, falling trees and subsidence.
Professional indemnity insurance
If you run your own business, this covers you in the event of a client making a claim against you for any financial losses that they incurred as a result of your work.
Public liability insurance
This covers you in the event of a member of the public injuring themselves or damaging their property as a result of your business. If you meet with clients in your home, it’s well worth considering taking out this kind of insurance, though it’s not a legal requirement.
Employer’s liability insurance
This covers any employees who work out of your home and who injure themselves or become ill as a result of doing so. It is usually a legal requirement that you take this out (if you have employees) and that you obtain cover for at least £5 million worth of damages.
Product liability insurance
This insurance covers you in the event of someone injuring themselves or suffering damage to their property as a result of a product that you have sold them (even if you didn’t make the product yourself).
Personal accident cover
This insurance does precisely what it says on the tin. It is to cover any accidents that may befall you and that leave you disabled, unable to work and/or in need of medical care, home modifications and other such expenses.
If you drive a car or other type of vehicle for your business, you need to ensure that it is appropriately insured. Be sure that anyone else who drives the vehicle is also fully covered. Note that a standard car insurance policy does not normally cover business use, so you will need to let your insurer know that the vehicle is being used for professional purposes.
How Much Insurance Cover Do You Need?
It often feels as though there’s insurance for pretty much everything these days. And, indeed, there really is! However, you don’t need to take out every single insurance policy that we’ve mentioned above.
It’s certainly prudent to take out buildings insurance and contents insurance for your home and to ensure that the policies cover your home being used as your place of work.
It’s also necessary to take out employer’s liability insurance if you employ anyone and vehicle insurance if you drive – both of these are usually legal obligations.
Extending Home Insurance Cover Vs Specialist Business Insurance
If you’re in need of working from home insurance, then extending your contents insurance to an all-risks policy is a good starting point. It’s then up to you to consider whether you need specialist business insurance as well.
When it comes to the types of home business insurance that you need – professional indemnity, public liability, product liability, etc. – it’s a case of assessing the level of risk. For example, if you have one client who pops round your house once per year for a total of five minutes, it’s probably not worth taking out a public liability insurance policy (although that’s very much your call!). It comes down to balancing what you’re comfortable with risking against what you can afford.
It’s also worth bearing in mind that some professional bodies require businesses to have professional indemnity insurance before they will work with them – so by not having it, you could be limiting the range of clients that you can work with.
Does Running a Business from Home Increase the Amount of Insurance You Pay?
Running a business from home won’t necessarily increase the amount of insurance that you pay, but it certainly has the potential to do so. From an all-risks extension to your home insurance to specialist home business insurance, there are plenty of opportunities out there for handing over your hard-earned cash to insurance companies.
Finding the Right Home Business Insurance
There are a lot of insurance companies out there, all of them offering slightly different policies. That’s why it’s important to clearly assess the kinds of insurance that you need.
It’s also important to shop around for your policies. Different insurers will quote different prices, different excess amounts and a wide variety of terms and conditions. As such, it’s essential to be clear on what you need and why.
Buying insurance means buying peace of mind – so make sure you give it sufficient time and attention!