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Does your home insurance cover your home-based business

Eleanor Newis
Dec 6, 2018

If your business is in your house, it's important to reassess your insurance policy.

If you are running a business out of your home, don’t make the mistake of assuming that you can use your home insurance to cover you. Many people make this mistake and put themselves at risk by not purchasing commercial insurance.

In actuality, most businesses, from selling online to wedding planning, require business insurance. A high proportion of small business ventures are based in peoples’ homes and are under-insured.

Some business owners don’t find out what coverage they actually need until an incident happens, and they find that their policy does not pay out.

This is because the reality is that homeowners insurance is not designed to cover business. So, a typical home insurance policy might have a lower monetary limit than is needed for a business.

A home policy might only cover damages up to a few thousand pounds, whilst business use of a building can rewire much more if an incident occurs.

There are a number of options when choosing a home business insurance policy, but here are the main ones.

Professional indemnity insurance

If you offer advice to clients on a commercial basis, you need indemnity cover. This protects you in situations where you make mistakes in your work, or if the client receives advice they don’t think is good enough. If your client suffers a financial loss as a result of your advice, you might be faced with a compensation claim from them.

Whether or not the error is judged to be yours, you might still incur legal expenses that could make a massive dent in your budget. Professional indemnity policies cover you for compensation and legal costs and can therefore be vital in keeping your business going.

Public liability insurance

Liability insurance covers you against any damages you might need to pay out if a member of the public has their property damaged or has an injury at the property you’re using for your business.

Someone can claim for slipping on the floor, or tripping in the house. This kind of insurance is especially vital if you meet with clients in your property.

Business buildings insurance

Don’t assume that damages to the building are covered by a standard home insurance policy. Make sure you opt for business buildings insurance, which will cover your home for both business and personal use.

This means you’ll only need to buy one type of insurance for the property too — as opposed to purchasing a business and a home policy separately.

However, make sure you also get contents insurance for your personal items, as they will not be covered by a business buildings policy.

How to choose your home business insurance

If you think you’ll be needing public liability insurance, it’s a good idea to ask your clients what level of cover they expect from you. Also consider how much of the public-facing aspect of your business happens in your home.

Pay attention to any exclusions or extra conditions that might be in the policies you consider. Use a comparison website like A Spokesman Said to really get the best deal for your budget.

This way, you can avoid the stress that comes with an incident happening on your property and focus instead on the business you love.


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