With the widespread digitalisation, home-based work arrangement is becoming increasingly popular worldwide, and the United Kingdom is no exception. Nowadays, many British entrepreneurs are actively looking for ways to start or run their ventures right from the comfort of their homes.
Additionally, it’s a more affordable option, especially for startups and small or medium-sized enterprises (SMEs). However, launching and running businesses from home doesn’t remove all the legal considerations entrepreneurs must make when trading.
The UK government highlighted the importance of insurance for an at-home business. Despite being situated at home, home insurance may not cover anything related, such as customers visiting your premises and work equipment, such as computers.
As a home-based business owner, there are various coverages to look into. Some of them are necessary, while others are recommended to have for added security. Find out below which insurance types your at-home businesses need.
Buildings Insurance
Buildings insurance covers any damage to the building you’re residing in. However, if an unexpected incident occurs, such as an accident (fire), natural disaster (flood or storm), or crime (burglary), it doesn’t cover anything inside it.
As if your home being a safe haven isn’t already important enough, turning it into a space for your business is definitely doubly so. The good news is you may already have it if you have a home insurance package.
If not, find an authorised home insurance provider on the British Insurance Brokers’ Association (BIBA) website. It’s also highly recommended to research, shop around, and compare quotes for home insurance to find better deals.
Check the home policy carefully. Some may not have coverage for rooms or home spaces turned into work or office spaces. In this case, slightly amending your building insurance policy or replacing it altogether is recommended to ensure your business has the coverage it needs.
Contents Insurance
As mentioned, building insurance doesn’t cover possessions you keep in your home. These are covered by contents insurance instead. It covers any items inside your home against loss, damage, or theft. It’s recommended if you leave costly high-end work equipment at home.
If you’re a digital nomad or have several business trips, it’s also possible to include items that you can take out of your home in your content insurance policy. For example, it can protect the laptop you bring when travelling.
As with building insurance, contents coverage could be included in your home insurance. But as above, it may need to be improved, amended, and replaced to ensure it covers all your business tools, devices, or equipment.
Product Liability Insurance
Getting product liability insurance is necessary if you’re running a product-based business like a food business or makeup line. This covers the legal cost of getting a customer hurt or their personal properties damaged caused by the products your business designs, produces, or supplies.
Should the customer win due to a successful claim, the product liability insurance can also cover the compensation you need to provide to the customer. It also covers the customer’s hospital expenses and damage costs incurred by the faulty product incidence.
Professional Liability/Indemnity Insurance
If you offer a service of consultancy like an architect, accountant, designer, IT professional, or trainer, professional liability insurance (PI) is highly recommended. It’s also called professional indemnity insurance.
Like product liability insurance, PI covers the costs of defending your at-home business against legal claims, such as loss of information, negligence, errors, omissions, and breach of confidence. This is a must-have since other clients refuse to work with your business unless you have it.
Public Liability Insurance
If customers and members of the public have to visit your place of work (in this case, your home) to make business transactions, public liability insurance is highly advised. This is recommended if you’re a hairdresser, stylist, tattooist, or anyone who offers professional services to customers.
It covers costs related to getting a customer injured or their property broken due to frequenting your business premises. Like product liability insurance, it covers legal costs and compensation incurred if a customer makes a claim.
For example, it covers the costs of damaging a customer’s wall while setting up equipment or hurting their scalp due to chemical irritation from a hair dye. Even if the cause of the damage is due to the customer’s recklessness, you may still be liable and be easily open to a claim as long as it happens within your business premises or services.
Final Thoughts
Insurance can protect us from significant expenses. For at-home businesses, it can be crucial. Hence, before getting the first plan you see, always read and understand insurance policies carefully. If unsure, contact your insurer and ask questions.
Doing so is highly recommended when you’re ready to start your at-home business. Don’t hesitate to provide details of it as early as possible to avoid any potential issues later on, especially if you need to raise a claim.
