Running a small business: does working from home invalidate your insurance?

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There are 2.9 million home-based businesses in the UK and for many of us this sounds like a dream: no rush hour commutes, no office politics, working the hours you want and freedom to dress exactly as you please. However, before you set up shop, it’s important to make sure you’re covered by insurance in case of theft, loss and damage. 

In the first of our four-part series on running a small business, we take a look at what you need to know about the ins and outs of insurance when running a business from home. 

Updating your contents insurance

While a standard contents insurance policy may cover the odd day working from home, if you’re running a business from your house and haven’t let your insurer know, you could find you’re invalidating it or not covered for everything you need. 

The first thing to do is check what your existing policy covers. Some exclude items used for ‘business or professional purposes’, others will allow them but for an increased monthly premium. The safest thing is to speak to your insurer and let them know your circumstances. 

When you’re working out how much cover you need, make sure you include everything to do with the business – such as specialist equipment and product samples. Although your premium may go up a little, you’ll have peace of mind in knowing you’ll be covered. 

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Additional business insurance considerations

As well as ensuring you’re covered by contents insurance, there are some other insurances you need to consider when setting up a business from home. 

Business buildings insurance protects you against damage to your home, such as flood or fire. And, as it covers your property for both professional and personal use, it may be able to replace your existing buildings insurance. 

In the event your business, products or services cause harm to a client, contractor or member of the public - or to their property - public liability insurance will cover legal costs and compensation, within the limits of your policy. This is particularly relevant if you have clients or customers coming to your home, as even a small claim could have disastrous financial consequences. 

If you offer professional advice to clients, you’ll also need professional indemnity insurance. This covers you in the event you give incorrect advice to a client or are negligent, causing them financial loss. 

And if you have any employees you’ll need employer’s liability insurance as well. This is a legal requirement, providing cover if they are injured or suffer a work-related illness while in your employment. 

Letting the authorities know 

Although it’s important to let your contents insurer know you’re running a business from home, some other authorities may also need to be kept in the loop.

If you’re renting a property, make sure you check with your landlord: some tenancy agreements don’t permit running a business from the premises. If you own your own home, see if there are any restrictive covenants which don’t permit the property being used for commercial purposes: these will be listed in the title deeds held by the Land Registry. If you’re a leaseholder, there may be conditions listed in the lease. And don’t forget to check the conditions of your mortgage: you may need permission from your lender. 

Depending on the nature of your business, you may also need a licence from your local council, especially if you’re expecting lots of customers or deliveries to your property. 

Running a business from home can offer many benefits but it’s vital to ensure you’re properly insured. Make sure you do your research – including speaking to your bank and other insurance providers – and always read the small print to make sure you choose the right policy for your needs.

  • Anthony Hua

    Anthony Hua,

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