If you are one of the UK’s fast growing number of home business owners, and share the view of 145,000 others who mistakenly believe that their home contents insurance will cover their business, it’s time for a wake-up call.
Recent research by Direct Line for Business and Enterprise Nation has revealed that as many as two in five home-run business owners aren’t insured at all, and 29% don’t bother with business insurance because they think it’s only for big companies or they believe their commercial activities are covered by their home contents insurance because the business is based at home.
Beware flawed beliefs
However, there are numerous flaws in these beliefs. Firstly, if you run a business from home and haven’t told your home insurer, you need to do so immediately. Otherwise you could find yourself with a rejection if you try to make a claim.
Secondly, you need to realise that home contents insurance is unlikely to cover certain business needs, like damage to or theft of stock, public liability or loss of earnings due to business interruption.
If you have clients visit you at home, it’s imperative you have public liability insurance. Otherwise, if they injure themselves, or cause damage to property, you are quite simply not going to be covered. This is a significant financial risk to put yourself under considering the sums often awarded for personal injury claims.
When it comes to business equipment, it is sometimes possible to insure things like computers on a home contents policy. However, fail to list such items individually and declare their use and you could find your cover invalid. Other equipment that is more specialist is definitely not going to be covered without a specialist policy.
How long could you survive without your income?
As a home business owner you need to give some serious thought to how long you could go on should something happen to interrupt your business operation. If there was a flood or a fire that damaged your stock or rendered your production equipment unusable, how long would it take to get back on track? What would you do for income during this time?
Businesses need business insurance
Businesses need business insurance: it’s as simple as that. You need cover that protects against loss or damage to stock and equipment. Your building needs to be insured for commercial use. And there are other types of insurance you should think about too. Business interruption insurance will cover any financial losses you make should you be forced to stop trading. Product liability will cover any claims that arise from injury or loss due to product flaws. Public liability is an absolute must if you receive customers or business contacts at your home. And employer’s liability cover is a legal requirement if you employ staff, unless the staff are close family members.
Running a business from home? Pay some attention to getting your insurance cover right. It could prove extremely costly if you don’t. If you don’t have an insurance broker then talk to your bookkeepers who will point you in the right direction.