People who run a business from their home often fail to take out adequate insurance cover to protect their properties and livelihood.
Home-based businesses have become increasingly popular, with hundreds starting their own firms each year.
For some it is a way to gain better control over their career and finances; others turn to their own business in the face of redundancy.There are more than 2 million home-based businesses in the UK and working from home, whether from the spare room, purpose-made office or outbuilding, bringing many benefits.
But it is vital that home business owners have the right cover in place.
In most cases standard home insurance policies do not provide adequate cover for a business, says Richard Pitt, head of UK Insurance Business Solutions, which arranges NatWest Business Insurance.
If business owners do not tell their insurer they are running a business from their home, claims could be invalid as standard home buildings and contents policies will not pay out, he warns.
Some insurance firms will extend a home policy to include cover for business equipment such as computers, but this may not be enough to cover stock or public liability issues.
A home business that employs staff, designs, manufactures or sells products or receives or visits clients must consider all the options, he says, including:
- Contents – Often covering old for new on goods, merchandise, stock, fixtures, fittings and equipment.
- Buildings – With optional accidental damage and subsidence cover. Protects against fire and flood.
- Employer liability – Legally required if the business owner takes on an employee under a contract of service or apprenticeship. Employment of close family members an exception.
- Public liability – Covers injury or damage to customers or clients who visit the home business, or if the owner visits their premises.
- Product liability – Vital if the business designs, manufactures or sells products. Covers claims arising from harm or loss because of product malfunction.
- Business interruption – Covers against loss of income if the business is forced to cease trading
Mr Pitt points out that business owners need the right cover to protect their business, home and livelihood against potential claims.