There are various types of insurance needed when starting a business from home. I have outlined these below to give an idea of potential risks that home startups are exposed to.
Commercial buildings insurance
The standard insurance for a home may not cover a commercial business when its created. Its advised to contact the existing insurance company to find out. One consideration is that there could be items to insure under contents insurance. The potential risks being flood, fire, storm and burglary. It is now not just a home but it is now the headquarters for the business. So it is extremely important that the building insurance covers all parts of the business.
The contents insurance covers the possessions kept in the home. These normally include furniture, electronics, jewellery and money. Mainly against loss, damage or theft. Some policies may cover accidental damage. However, they will not cover items owned by the business. There needs to be a specific policy in place. It is unlikely that this can be taken out separately from the buildings insurance. It would, therefore, be best to find building insurance that includes contents.
Employers liability insurance
Employers liability insurance is for if an employee needs to claim from their employer. This could be if they were to be injured, ill or their property is damaged as a result of working for the business. Employers liability insurance covers this along with any legal costs incurred.
If a home startup has employees or plans to hire employees in the future then the answer is yes, the cover is needed. It is therefore important to check that this is in place.
Public liability insurance
This covers if a customer or client suffers an injury or damage to their person or property as a result of visiting the business.
This insurance can cover legal costs incurred if a customer or a client makes a claim and receives compensation.
If the nature of the business involves members of the public visiting the home or travelling to visit them this should be an essential policy.
For example, a customer may trip on a rug and break their ankle. The customer would have strong grounds to make a claim. It is therefore important to ask and check.
Professional Indemnity insurance
This is often referred to as PI insurance. This covers losses made from making mistakes or providing inadequate services or advice whilst working with a client. The types of claims covered by this insurance include libel and defamation, negligence and misrepresentation. As well as omissions, errors, breach of confidence and loss of information or money.
This is a must-have product for any business with employees. It covers the liability of the employer against employees that want to claim for their losses. This will cover the claimants’ costs and expenses that the employer is legally liable to pay. As well as their own legal costs and legal expenses and compensation for attending court if necessary. For example, if an employee trips over a wire and is unable to work due to their injury the employer could be liable for all of the above. Due to the sensitive nature of the cover and the high potential costs involved taking this type of policy is highly advisable.