How does running a business from home affect your insurance?

Running a business from home can be a cost effective and convenient option for many sole traders and new enterprises. But even a micro business, or side hustle, can affect whether your current home and contents insurance policy is valid. So, what kind of insurance might you need if you’re running a business from home?

We’ll explore that. But first, it’s time to check what may be covered by your existing policy.

Check whether your home-based business is covered by your existing policy

If you operate a home-based business, it’s crucial to check whether your insurance policies cover you. In most cases, a home and contents policy will not provide cover for a business, no matter how small that business may be.

Steadfast Technical Broking Manager, Annette O’Brien says it’s important to check the fine print in your policy.

“If you have any doubts, contact your insurance broker who will be able to assess both the type of business you’re running and your individual needs, to advise on the best policy for you,” she says.

One thing to be aware of she adds, is that in some cases, if you only have home and contents insurance, and then make an inquiry about coverage for a home business, you may find your existing policy may be cancelled.

“Insurers do need to provide an explanation to the policyholder if they intend to cancel a policy or decline a request for insurance cover because the business activity is undertaken from home, but it is something we have seen happen,” said O’Brien.

“It’s important to be honest with your insurer if you conduct a business at your home. If your ABN is registered under your current address, then you should check the wording of your insurance policy to see if there is any cover for a home business – which is generally unlikely.”

Before you contact your insurance company, you can seek the advice of an insurance broker who can provide guidance around the best policy for your needs.

It is important for the insurer to be aware of your circumstances as there are severe consequences for non-disclosure or misrepresentation, no matter how unintentional your actions are.

“You should also be aware that if you deliberately conceal from the insurer that you are running a business from home, it could constitute fraud, the consequences of which are very serious,” O’Brien says.

What insurances does a home-based business need?

O’Brien says there are a number of common insurance mistakes people make when running a business from home. Most of them involve people not thinking about the type of insurance they may need. “And when they do,” she says, “they’re unsure of what items to include.”

In some cases, you may be able to extend your existing home and contents policy to cover your office equipment, such as your laptop. However, it is more likely you may need to take out separate business-specific insurance policies.

Business insurance policies can include:

• public liability insurance (this is very important if you have customers or suppliers visiting your home)
• business interruption insurance
• accidental injury insurance
• income protection
• money insurance
• general property insurance
• machinery breakdown insurance
• tax audit insurance.

Do you have questions about insurance for running a business from home? Talk to a Qualified Professional Insurance Broker today.