The number of self-employed people in the UK has increased hugely in recent years, with the latest available figures from the Office for National Statistics showing a rise of 1.5 million between 2001 and 2017.
A large proportion of them work from home all or at least some of the time, but what many don’t realise is that unless they have the right insurance in place, their new work-life balance could lead to financial ruin if disaster strikes.
Does your existing home insurance cover you?
The problem is that, from an insurer’s point of view, working from home can create extra ‘risk’, depending on the type of work the insured does.
A standard definition is that anything done from home on a regular and repeated basis for the intention of monetary gain could be defined as ‘business use’ and might mean a change to your cover is needed.
You might be a carpenter who’s set up a workspace at home, a web designer with several hugely valuable laptops or a chiropractor who has patients they treat in a space where they live
Whatever the work, your existing home insurance might not cover you, your property, the equipment you use, or the business customers who might visit, once a home is used for business purposes.
If this is the case, you might need additional cover or even a stand-alone business insurance policy.
What could go wrong?
If you haven’t checked with your existing insurer and talked through what it is you’re going to be doing from home, you run the risk of your cover becoming null and void.
Something might be stolen from an outside workspace you’ve created, or a client might hurt themselves while at your property and sue you – whatever the problem, the insurer could reasonably say you’re not able to claim as they hadn’t been informed of the change in use to your home and adjusted your policy accordingly, if it’s possible to do so, that is, without your needing stand-alone cover.
What are the cover options?
It might be that you’re covered under the terms of your existing home policy, as some allow for ‘administration duties’. However, most policies don’t cover you for ‘business and professional purposes’.
Some insurers might be happy to extend your cover, as well as adding accidental damage and away-from-home cover for the business items, such as laptops, that you use and might need to take out and about with you.
However, specialist cover, such as stand-alone business insurance, could very well be needed depending on the nature of your work – it’s only reasonable that an ordinary home insurance policy won’t include cover for hazardous materials and equipment worth tens of thousands of pounds that’s intended for business use, for example!
Such stand-alone cover shouldn’t cost a great deal, and it’s very much a false economy to try and save by not taking any out if you need it. Losing your ability to earn a livelihood as you can’t afford to put right what might go wrong simply isn’t worth the risk!
What to do right now
The first thing to do is speak to your insurer, or insurance broker, and talk through your situation. You should find that the right insurance can be set up or adjustments made to an existing policy so that you’re correctly covered immediately.
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Published 20 August 2019