Thousands of people who set up home offices or start new self-employed businesses do not think about the implications for their home and car insurance.
For those who are still employed and merely log in online instead of going in to an office, the change is not a problem as most home insurance policies provide cover.
But entrepreneurs who use their home as a place of business face extra insurance risks.
First and foremost, they should get in touch with their home insurers before they start trading to let them know about the change of use of their home.
Insurers will want to know several details about the new business, like:
- Stock – will valuable or hazardous materials be stored in the home?
- Money – will substantial amounts of cash be kept on the premises?
- Manufacturing – will the business involve installing equipment and making goods that involves health and safety concerns?
- Employees – will you take in staff that will work from your home? Employers have a legal obligation to provide liability cover for staff and workers.
- Clients and visitors – will more people visit the home for business? If so, you need to protect your business against a claim for accident or injury.
- Business computers, furniture and equipment – Standard home insurance covers personal use but not more intense use for business
Other considerations new businesses working from home fail to consider include car insurance – changing from a social, domestic and pleasure rating to business may increase insurance premiums for the same car.
Some businesses, like running a courier or taxi service need specialist insurance.
Business professionals who provide services rather than goods, like accountants, marketing experts and web designers should not forget professional indemnity insurance that guards against claims for giving poor advice to clients.
Contractors who repair equipment for a living at home or somewhere else can take out additional cover that covers loss or damage to a customer’s property.
The newly self-employed should also review their protection options as well. Many sickness and unemployment insurance policies may not offer good protection for anyone working for him or herself.
Stopping the policy or changing the cover may make financial sense.
Many self-employed workers take out private medical cover. The benefit is if they need time in hospital for surgery, paying for private medical care often means less time off work and no NHS hospital waiting lists.