Do I need business insurance if I work from home?

20th September 2018

It's easy to see the plus points of working from home. You don't have to daily contend with packed roads and traffic jams on a morning commute, while you already have the office, power, phone and internet-connected computer that you need.

In light of all of this, it isn't too surprising that 2.1 million companies are run from home, as revealed by bytestart.co.uk. On top of that, 60% of new firms - 1,400 a week - are formed at home. However, if you intend to add to that number, this raises the question: do you need business insurance?

Buildings insurance

One particularly strong merit of working from home is that, if you are running your own business, you don't need to spend money renting a dedicated office space. After all, you would already have a roof over your head as you get underway with your work.

Still, while a buildings insurance policy which you already hold could help you to fund repairs to your home should it incur damage, this coverage might not extend to your use of the home as a workplace. Hence, if working from home damages the building, the policy won't help you.

Therefore, if you are about to start working from home, assess whether your current buildings insurance would remain valid. Otherwise, you might need that policy changed or replaced.

Contents insurance

Your home will include various personal possessions - such as furniture, money and jewellery - which might be covered by what is known as contents insurance. However, be careful when you start adding business equipment to your home, as your contents cover might not cover that equipment.

This is another instance where you ought to get in touch with your insurer to ask whether these business items would indeed be covered. If they aren't, a new policy might be required. Fortunately, you can cover even items that could occasionally be removed from the house, like a laptop.

Hot drink, laptop and flower

Employers' liability insurance

This is a rare example of business insurance that is actually legally necessary... in particular instances. Right now, you might be working alone - in which case, you wouldn't need it. However, it would be a different situation if you intend to employ someone.

You must have employers' liability insurance in place before you officially recruit even one employee. Otherwise, you could be fined up to £2,500 for each day that you don't have this insurance. This rule applies whether your staff work full-time, part-time, casually or as contractors.

There remains, however, one notable exception: you employ only closely-related family members. Examples of such can include a parent, spouse or child, the Startups.co.uk website explains.

Professional indemnity insurance

However diligent you are in making sure that you provide high-quality services or advice to clients, you can never entirely rule out the scary possibility that you make a mistake. That mistake could inconvenience a client who, as a result, might be motivated to sue you.

The client might accuse you of negligence, errors, misrepresentation, breach of confidence or losing information or money. However, on whichever of these charges they bring their legal case, professional indemnity insurance can assist you in paying to defend against the claim and, if you ultimately lose the case, funding compensation which you owe to the client.

Public liability insurance

While employer's liability insurance could be a legal necessity in your case, public liability insurance wouldn't be in any case. However, taking out public liability cover could still be worthwhile for your peace of mind, as you could use this cover to pay for compensation to members of the public.

Let's consider the example of a client regularly visiting your home to receive products or services. From you, this person might receive a service which leads them to suffer an injury. On the other hand, this client might trip over something carelessly left on your carpet and so injure themselves.

In such situations, public liability insurance could serve the purpose of making up both the cost of compensation and legal costs you might incur in the run-up to that compensation being awarded.

Business interruption insurance

Usually, if you were to regularly commute to a physical office that suddenly becomes damaged or robbed, you would have an obvious backup office: your home! However, what if it is the home itself that is subject to damage or robbery? In this instance, business interruption cover can help.

If your home is adversely affected to the extent that it is no longer practically possible to routinely use as a workplace, business interruption insurance can plug an earning gaps that might otherwise widen. At Be Wiser Business Insurance, we offer such cover for small businesses.

Car insurance

You might already have a car which you originally bought for personal use, but you have since decided to put to businesses purposes as well. It is legally mandatory to have car insurance of at least third party level before taking a car to UK roads.