Starting a business from home: What insurance do you need?

Starting a business from home: What insurance do you need?

EntrepreneurshipFounder Resource

Key takeaways (read the original full post here):

If you’re starting a new business, using your home as the primary business premises doesn’t remove all of the legal considerations you’ll need to make when trading as a business. In particular, you’ll need to make sure you’re adequately insured.

There are several types of cover to look into as a home-based business owner – some of them are crucial, while others are nice to have for added security.

Professional indemnity insurance

Professional indemnity insurance (or professional liability insurance or PI) covers you in the event that you make a mistake/provide inadequate services or advice while working with a client. Claims include libel and defamation, negligence, misrepresentation, errors, omissions, breach of confidence, loss of information, and loss of money. You’ll be covered for the legal cost of defending your business against any claims, as well as for the compensation owed.

  • Should I get it?

Accidents can happen and you won’t necessarily be able to stop a client from making a claim against you.

If you deal primarily in knowledge and skills – offering a service of consultancy: as an architect, accountant, IT professional, trainer or designer, for example – you should think seriously about getting this cover.

In fact, some clients will refuse to work with you unless you have it.

Public liability insurance

Public liability insurance covers you if a customer or client suffers an injury, or has personal property damaged, as a result of frequenting your business premises. Can cover both the legal costs incurred if a customer makes a claim, as well as the compensation owed.

  • Should I get it?

If members of the public come to your home or if you visit theirs, this should be a key policy for you.

Product liability insurance

If you’re running a product-based business, it’s a possibility that an item you sell will cause injury or illness to a customer; or it could cause damage to their personal property.

  • Should I get it?

It’s easy to assume that your products won’t cause any harm or damage, but accidents happen. Product liability insurance is a necessary protection.

Employers’ liability insurance

If an employee is injured, gets ill, or has their personal property damaged as a result of working for your business, they can claim compensation from you. Employer’s liability insurance covers this, along with any legal costs that you might incur.

  • Should I get it?

If you have employees – or plan to hire them soon – the simple answer is yes.

Buildings insurance

Buildings insurance covers damage to the building you’re living in – but not the things inside it – in the event of an unexpected incident: a flood, fire, storm or burglary.

  • Should I get it?

You’ll likely already have buildings insurance coverage as part of your home insurance package. However, you’ll need to check your policy carefully as some don’t cover rooms being used as office space.

Contents insurance

Contents insurance covers the possessions you keep in your home, against loss, damage or theft.

  • Should I get it?

As with buildings insurance, you’re likely to already have contents insurance in place. But as above, your policy may need to be amended, improved or replaced to make sure it also covers business devices, tools or equipment.

Personal accident insurance

If you get into a serious accident, it’s possible that you’ll be out of action for a while.

Personal accident cover provides you with money for day-to-day living while you’re out of work, as well as covering the cost of any medical expenses.

  • Should I get it?

If your business needs you in order to keep going, whether that’s closing deals or managing workflows, it might stop making money while you’re away and recovering. If this is the case you may lose your own wage, and the payments offered by this insurance could be a real saviour.

Choosing insurance policies

It’s important to consider the level of coverage you believe you’ll need.

Do some research into claims typically made in your industry and by your target customer to get an idea of the level of coverage you might require. It may be that clients expect you to have a certain level of cover.

A comprehensive small business policy which includes all that you need in one plan might be a more cost-effective option than taking out a variety of separate policies.

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