Using your home for running your business, comes with a lot of benefits, but still, you need to consider specific business insurance, to keep both your home, business and office equipment safe and protected. Working from home business is bringing some additional risks to your residential and living property and its security.
Working from home business insurance? Working from home business insurance is a special type of insurance that is taking into account the impact of the home business, as well as insuring your home and all of the content, office tools, and clients or customers visiting your home.
Working from home means that there is no commute to work, spending money on traveling to work or renting out expensive workplaces. You can use all of that time and money into investing in your business or increasing your productivity.
However, whether you run a home business, you are a freelancer, or occasionally work from home for your employer, there are legal considerations that have to be made that could affect your home insurance and probably it won’t cover your home business.
Working from home business insurance can protect you from different business-related troubles, that a regular residential insurance policy won’t. Typical home insurance is covering most of the furniture, paintings, and clothes, including some electrical devices (TV, PlayStation, WI-FI router etc.) inside the home against the possibility of damage, loss, and theft. This policy may not be covering the specialized devices you use for work.
It would be best to check with your insurance provider, what exactly is covered by your regular insurance. Make sure to inform them, that you are running a business or working from home, because otherwise if you don’t disclose this, they can invalidate your policy and in case you have some claims, they won’t cover those claims and working from home can turn out to be not so cost-effective.
There is a possibility to put some or in some cases all of the costs for insurance through your business books, and you will have some tax and costs advantages. Your bookkeeper or accountant can advise you on how to deal with this situation.
Depending on your niche or profession, there are several covers that you need to consider for your work from home business insurance package. Here are the insurance policies that you might need:
- Content insurance;
- Professional indemnity insurance;
- Employers’ liability insurance;
- Public liability insurance (PL);
- Product liability insurance;
- Insurance for your car;
- Insurance for a personal accident;
- Insurance for the buildings;
- Stock in transit.
Insurance for your contents
Most of the home insurance policies are already covering your home contents, but there might be a need of altering the policy so that all of the business devices, laptop, equipment, and tools are also included in the policy. Go through your insurance policy very carefully to find out if you need to do some altering.
If you are using some special devices or equipment, make sure to update your insuring company on what are you doing and the specifications for your devices. Provide as many details as you can at the start of the whole insuring process. Keep all the receipts and guarantee documents as proof of purchase. This will help you in avoiding problems in the future if you need to replace or fix your devices due to some damages.
Additionally, some of the insurance policy doesn’t provide cover for damaging your laptops, mobile phones and any equipment that is portable if they are outside of your home premises.
If you are using your devices outside of your property, it would be best to add “all-risks” cover extension, so that you will have cover for any accidental loss or damage to these devices, while you are at home or outside.
Be careful not to under-insure your contents, because if you need to make any claims, you won’t be able to receive the full compensation. Also, if you over-insure, you will just waste your money by paying a lot more than the needed premiums.
In case you are keeping product samples or stock at your house, you also need to inform your insurer, so it can be covered under your content policy. Sometimes you may need to acquire additional business insurance on top of the existing contents policy.
Professional Indemnity Insurance
Professional indemnity (liability) insurance or PI insurance is covering almost all the mistakes while providing inadequate services or advice to your clients. This insurance is covering the claims against you such as negligence, libel, and defamation, errors, misrepresentation, breach of confidence etc. PI insurance is covering you for the legal cost of hiring attorneys for defending your business against client claims as well as the cost of compensation that you should pay them.
If your field of expertise is offering advice like an accountant, architect, consultant, IT consultant, designer et., you should consider adding this insurance to your policy. Because even if you are sure that you won’t make some mistake that will bring damage to your client, accidents can happen and that won’t stop them from making a claim or suing you.
Employers’ Liability Insurance
If you have employees working from your home, you are legally required to get employers liability insurance whether your employees are working part-time, full-time or are casual workers. Otherwise, you can be fined with a few hundreds of dollars, so it won’t be as cost-effective if you don’t add this insurance to your policy.
This insurance is covering the legal costs and costs for compensation if an employee makes a damages claim due to illness or injury as a result of working for you in your home office.
Even if your home business has gone into a situation of receivership or liquidation, your employee can still make damages claims against you as well as the NHS can make claims for treatment and ambulance costs against you, all of which can make a not so good working from home day.
Sometimes there is an exception if your employees are actually your family members such as parent, spouse, child, brother or sister, so you probably don’t need this kind of insurance.
Public liability insurance (PL)
If your field of work requires for customers or clients to visit your home office for business purposes or you need to visit theirs, it is highly recommended to have public liability insurance. Some clients may not agree to work with you unless you have this type of insurance. This type of insurance is covering you for the cost of compensation, in case someone visiting your premises has some claims due to being injured or getting some kind of damage to their property.
This insurance also is covering the legal fees made for defending against the claim.
Accidents can occur, even if the third party just briefly enters your premises. For example, when a customer comes to collect the cake you’ve made, they can trip or slip, or you can easily damage the wall of the customer while setting up the equipment. It is really important to look after the safety of all the people coming to your house. It would be best if the work area is separated from the domestic area.
Product liability insurance
If you are in the business of manufacturing and selling products, you should consider taking a product liability insurance. This insurance is covering you for claims made against you, in case a product that is manufactured, repaired or sold by you, causes some kind of injury or illness to your customer, even damage to their property.
This insurance is covering the cost of compensation to the customers and the legal fees.
Even if you think that your products are well tested and they can’t hurt anyone, accidents do happen. For example, your food product can cause some allergic reaction and make someone sick.
Insurance for your Car
Usually, personal auto policies, don’t cover the business use of your car. If your home business requires the use of a car or van for business purposes, you are required legally to upgrade your car insurance. Just as you should check if your home insurance policy is covering your business needs, also make sure to check if your current business policy is covering the use of your vehicles for business purposes.
If you are using your car for business needs, such as making deliveries, picking up packages or visiting clients, if you have an accident while doing so, your existing personal vehicle policy won’t cover you. You need to upgrade your car insurance so you can be covered for any extra miles you cover outside the everyday commuting.
Vehicle insurance for business needs is an absolute necessity when using the car for any business purpose, and is quite inexpensive.
When you register a vehicle for your home business, you will definitely need a custom policy for business use.
If you or your employee need to use the car for traveling for work-related business reasons outside your home office, make sure your existing car insurance is covering business use.
Insurance for personal accident
In the event of getting into a serious accident or some type of illness, it is most likely that you will go through the long recovery process and you won’t be able to work even from the comforts of your home.
Personal accidents cover is providing you with a salary for the period when you are out of work, as well as providing cover for all medical expenses.
If your work position, when working from home is crucial and requires you to forge ahead, make progress, meet deadlines and close deals, you may lose a lot of money while you are recovering. In this case, you might lose your salary and the payments made from this type of insurance can be really helpful.
This type of insurance is usually activated in extreme circumstances, and if there is no one that can take your place while you are away, you should definitely think about updating your insurance.
Insurance for Buildings
Insurance for the buildings is covering the damages made to the building you are living in, due to unexpected events such as flood (including burst pipes), storm, falling trees, fire etc. This type of insurance is covering only the building, not the contents inside it- that’s the content insurance field.
Your home has the utmost importance, and when you also use it for work, its importance doubles. As part of your regular insurance policy, most likely you already have the building insurance. However, you should check your existing policy, since some of the policies don’t cover the rooms and spaces used as a home office, so you will probably need to alter your current policy.
Stock in Transit
Some home business has to deal with delivering their products to the customers, or collecting the stock from their suppliers. In these cases, it is very usual for goods to be damaged or to get lost during the transit. This insurance is covering the financial impact if that event happens.
Choosing the Best Insurance Policy
When the time comes for choosing an adequate insurance policy, it is really important to consider how much of a cover you will need. Of course, when you start working from home or opening a home business, you won’t be able to predict how much cover you will need.
To have some idea of the level of cover you are going to need, do some research into the claims that are usually made in your field of work, as well as by your target customers. Sometimes, your clients can ask you to have a certain level of cover.
When you find what you were looking for, go for an insurance policy that is covering everything you need, because this is a more cost-effective option than buying separate policies.
Since there are a lot of people working from home and opening home businesses, a lot of insurers are offering these additional covers as endorsements on the standard home insurance policies. Other insurers are offering special policies that are covering the home and the home office.
Compare the products available in the all insurance policy to the cost of those in the separate business policies. Because sometimes the products can offer less cover and are packed together only for some kind of benefit.
Does working from home affect my mortgage?
Whether is a mortgage or home insurance, you have to inform your providers, when starting to work from home, or opening a home business.
If you are working for a couple of days per week from home, you don’t have to worry about altering your mortgage plan. But when you start to work from home permanently, there can be some changes in how your home is classified.
The main reason, why the mortgage providers are interested if you are working from home, is to help them distinguish if your property should be considered as commercial or residential. The commercial mortgage is more expensive than the residential one.
Usually, if you use more than 40% of your property for business reasons, the mortgage will be with commercial rates. For example, converting half of the house for cake bakery is a lot different than registering the address of your home as the premises of your online marketing agency.
Of course, the second one will probably have you sitting in the living room or on a designated work station in your home, and it very unlikely that your mortgage will be somehow affected. While the first one would mean installing different kitchen appliances and hiring employees.
The mortgage provider will take all of this into account when providing the mortgage rates.
Do I need to have business insurance if I work from home?
If you are working from home or have a home business you should acquire business insurance if the following aspects are met:
- You have goods or some other merchandise that will have to be replaced if they are damaged or stolen;
- Your clients or customers are visiting your property regularly;
- You have one or several employees;
- There is a risk of flood, fire or some other type of emergency, that can damage your house and all the contents inside it;
- One of your employees is crucial in the progress of your business;
- All of your business activities can somehow injure a member of the public, or make some damages to their property;
- You offer to consult services that can bring some legal action or claims against you.
What questions should I ask when buying insurance?
Before signing up to a certain policy make sure you get all the information for the following questions:
- What will be covered exactly by this policy?
- How much will be the premiums?
- Is there a bonus for no claims in a certain period?
- Does the insurer is available 24-hours for emergency or legal advice?
- What is the amount that you will have to pay if there is a claim?