Home insurance is there to protect you if you get burgled or your home is damaged by fire or flooding. But will it protect you if you run your business from home?
A lot of people are starting home businesses these days and confusion about insurance is very common. If your computer is being used for business purposes, for example, will this be covered by your home insurance or not? Do you need a separate policy if you run a business? If you are concerned about insurance issues, here is everything you need to know.
Contents Insurance
People often wonder whether they need extra contents insurance if they run a business. The answer to this is that you may not necessarily need additional contents insurance if your policy already includes it or you have told the insurer that you are using the machine for business purposes. Every policy is different and you need to look for ‘clerical use’ clauses in your paperwork. Some insurers will include coverage for clerical use as standard, while others won’t. If yours doesn’t, you won’t be covered for equipment that is used for business purposes, so you will need to upgrade your policy.
Stock
When you are running a home business on a budget, you might decide to save money by storing stock yourself. If you store any stock in your home, it is unlikely that this is covered by your business insurance. Unlike things like computers that are used for personal use as well as business use, any inventory is separate from the rest of the items in your home where insurance is concerned. So, you will need to take out a specific home business insurance policy if you are holding stock in your home.
Liability Insurance
This is the biggest area of concern for most home business owners. When running your own business, you are technically liable for any work related injury or damage caused by your activities. You are responsible for safety measures that are taken on your premises and any injuries that occur as a result of these measures being inadequate. If a client is injured at your home and they decide to sue, your standard insurance won’t cover it. If you work in other people’s homes as part of your business, you need coverage there. For example, public liability insurance for plumbers is vital in case they accidentally cause damage to property. Without the right liability insurance in place, you open yourself up to expensive lawsuits, and none of this will be covered by your standard home insurance, so it’s vital that you have a specific policy.
Loss of Earnings
If you are running a home business and your property is damaged by fire or flooding, for example, you will be unable to work for a while. A standard home insurance policy will cover you for all of the rebuilding costs, but what about the loss of earnings? You won’t be covered by your standard policy, so you will need to upgrade to a specific income protection policy.
In most cases, your normal home insurance will not provide adequate cover if you are running a business from home, so make sure that you update your policy.