Home Business Insurance

In this time of job losses and reduced employment opportunity 60% of the 1,400 new businesses started in the UK every week are run from home and if you are dealing with clients in a professional capacity or visit customers at their own sites you may need insurance cover.

Many are Internet based and eBay businesses are booming, with many hobby-based start-ups turning into fully professional businesses thanks to the profile of the online auction site.

Thanks to the accessibility of high-speed Internet connections and the falling costs of home office equipment, such as printers, computers and scanners, the cost of starting a business from home can be very low.

Running a business from home can be a profitable and enjoyable way of making a living.

But just because you are sitting at home in your comfortable office-chair, with the coffee-machine bubbling and radio playing does not mean that you can take the notion of insuring your business any less seriously.

In any business things can go seriously wrong and you need to be covered against any eventuality. Don't be misled into thinking that your regular home insurance will cover you. This is rarely the case, although some household policies can be extended to cover a home business.

What do I need to cover with Home Business Insurance?

Your business is unique. Your insurance requirements will depend on the type of business you are running but among the areas to cover the following are the most important:

• Public Liability Insurance: If your business requires that clients visit your home or premises (such as a recording studio, for example) or if you have to visit a client's home in the course of your business, public liability insurance will cover you against injury or damage which happens during such visits. You will probably need at least £1 million worth of such cover for the average, small home business.
• Employers' Liability Insurance: Even small home businesses may expand to the point where you need to hire staff and this is when your insurance cover becomes vital. It is a legal requirement to cover the health and safety of your employees, unless they are family members or you are the only 'employee' of the business. It's not always obvious that you need this cover but even employing a cleaner, who visits your home office, would need to be covered by such insurance. The lack of such cover can land you with an enormous fine of £2,500 every day that your business runs without it!
• Product Liability Insurance: Product Liability Insurance offers protection if any customers are injured or suffer property damage due to goods you sell them. Even if you are not the manufacturer of the product, as the supplier, you can still be held responsible.
• Professional Indemnity Insurance: If your home business operates as a consultancy, offering skills, advice or knowledge professional indemnity insurance will cover you against any claims that this advice was deficient or damaging. You can cover work that you carried out in the past which may cause problems for the customer later. You will need to be covered for £5 million for some customers to consider working for you.
• Business Interruption Insurance: If you are unfortunate enough to suffer a claim that affects your business this kind of insurance can be a safety net which could mean the difference between surviving and closure. If you are hit badly by such a claim the additional expense of recovering the business to its previous level may also be covered.
• Extended Health Insurance: Most health policies are effective only in the short term and you may have to consider what would happen if you were ill or injured and could not carry on your business. Income Replacement Insurance or Permanent Health Insurance is available but tends to be very expensive and beyond the means of most small home businesses.

How to chose the right home business insurance

With all these options to bear in mind it is essential to choose the insurance that is appropriate to your business. If you need only £1 million of Public Liability Insurance, for example, you need to make sure that you are not paying for £5 million worth of cover.

Many Insurance companies will offer free advice to home businesses and there are independent financial advisors who can give impartial advice if you feel the companies themselves are unlikely to be unbiased in their suggestions.