• Catherine France

Quick Guide to Insurance if You Work From Home

Updated: Jul 6, 2020

Have you had to pivot your business during the lockdown and now find yourself working from home?

Or maybe you are one of the 4.8 million people who now class themselves as self-employed many of whom run a business from home. [1]

It is a great idea to use your home as your office – it's a low cost, convenient, reduces your commute to zero and you don't need to worry about feeding the cats but what would happen if you suffered a loss that wasn't insured, could your cash flow cope?

Have you considered the potential risks and taken steps to protect yourself and your clients?

With the best will in the world accidents can happen, whether it's a slip, trip or you spill a drink on someone. Even the most innocuous of claim can end up costing you, thousands of pounds, which if you are not insured, could have a detrimental effect on your cash flow.

Making sure you have the right insurance in place could help protect you and your clients, albeit I know that some of these scenarios may not be possible in the current lockdown.

Here are the types of insurance you should think about;

Professional Indemnity - Professional Indemnity Insurance is important if your business gives advice to other people or businesses, this type of cover is designed to protect you if you provide them with incorrect advice which results in them suffering a financial loss which could result in them taking legal action against you. This type of insurance would cover the legal costs and compensation, within the terms and conditions of the policy.

A claim against you could arise if a client claims that one of your coaching packages steered them in the wrong direction or if they felt it has caused them to suffer a financial loss, perhaps their business does not grow as expected or a suggested strategy does not glean the results they were expecting and they feel you are at fault. This does not mean you are at fault but the insurance will help you defend such allegations.

Professional indemnity policies are usually based on a limit of indemnity, say £1,000,000 of cover. However the way claims are paid can either be “aggregate” or “any one claim”. If the policy is based on £1,000,000 cover in the aggregate then £1,000,000 is the maximum your insurer will pay out during the term of the policy i.e. if you were very unfortunate and have 3 claims at £400,000 each they policy would pay £1,000,000 and you would be liable for £200,000 of uninsured costs. If they policy is based on £1,000,000 cover for any one claim this it would provide £1,000,000 per claim and you won’t be uninsured as long as any one claim does not exceed the £1m limit.

Home Insurance - If an accident involving someone else occurs at your house in the course of your business, then you may not be covered under your homeowners' insurance policy. Your home may be private but your liability, in the event of a work-related mishap, can be uncomfortably public.

Standard home insurance only financially protects you for loss, damage or theft which affects items used for 'household administration duties' in the home, not business use.

If you work from home and something goes wrong in circumstances associated with your work, which you then make a claim for, the insurer might deny the claim if you hadn't changed your policy to reflect your home working.

It may be that you need what's called an 'all-risks' policy, which includes items used for your business purposes. An all-risks policy can cover business items when they're taken away from home, such as a work laptop.

If in doubt, ask - It's best to check if you're covered for work you do from home, as if you're not, you risk losing your home's contents and possibly building too with no compensation.

Business Interruption Insurance - Business Interruption is there to help you get back up and running if there is an event, such as fire or flood, which stops or interrupts your trading, and this type of insurance can cover the consequential loss of revenue. It can also provide alternative premises, so you can keep trading, cover if your main supplier suffers a loss and your business suffers or cover if a laptop/tablet is stolen preventing you from trading but check with each individual insurer for full terms and conditions.

Motor Insurance - You will need the right Motor Insurance for business use if you are visiting clients in your car or transporting your stock or goods between your business, suppliers to events.

Cyber Insurance – If you use a computer to run your business then you probably need cyber insurance. The increase in the number of incidents where people use a computer to commit a criminal offence is on the rise and a cyber insurance policy can help, whether you suffer a data breach or a hacker holds you to ransom, provide cover against damage to your computer systems, removing viruses and loss of income in addition to which insurers can also include access to professional cybersecurity consultants and PR experts to help minimise the reputational damage a loss of data could cause your business.

How much insurance cover should I have?

If you underinsure your contents, you won't receive the full compensation if you need to make a claim. Over–insure and you'll be wasting money by paying a higher premium than needed. It worth spending time creating a list of what needs insuring.

If you keep money at home that is collected as part of your work, then you will need to make sure that this is also insured on your policy in case its lost or stolen.

Tip: Always keep any receipts as proof of purchase and, should you need to make a claim, be honest with your insurance company as to how much items cost.

What Do You Need to Do?

When your home address is also your registered business address then your home insurance company will need to know the nature of your business. They'll want to know:

  • If you're just using your home for clerical work

  • Whether you have regular visitors

  • Whether you store goods at home and what they are

  • Whether you hold any specialist tools or equipment

They may decide to extend your contents cover to include your business stock and equipment, or they could ask you to take out a seperte policy for these items.

I hope this has given you enough information to consider the risks to your business and how you can protect yourself against them.

If you enjoyed this post, you might also like to read;

Do You Know What Type of Liability Insurance You Need?

Do I Need Insurance for My Side Hustle?

Important Note: This blog post is written to provide you with information on the types of risks your business could face and the sort of insurance which could help you protect youand your business, however this is not personalised advice and every business is different. If you need to arrange cover please contact an insurer or insurance broker.

Sources: [1] LV

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