Working from home and home insurance

More and more people are working from home, either running their own businesses or working remotely for employers as freelancers or full-time company employees.

Recent figures from the TUC show that home-working has increased rapidly over the last few years, rising by an estimated 470,000 people since 2007 to just over four million.

However, many don’t realise that doing so could jeopardise their home insurance, and even possibly invalidating it altogether.

So what sort of insurance do you need if you work from home? And what might you need to add to your existing cover to take into account what you do?

Adjust your current cover

It might be that you need to adjust your home cover to take into account possessions which are deemed to be used for work purposes; in other words for ‘business use’ rather than ‘domestic use’.

This might include computers and laptops as well as hi-tech design equipment, printing equipment, printers and photocopiers, even cooking items if you run a cottage industry from your kitchen, for example!

You may find that insurers refer to cover for those who work from home as ‘home worker insurance’.

What’s considered ‘business use’?

When insurers talk about ‘business use’ it generally refers to anything that’s done in the home in a repeated and continual way for financial gain.

If you’re running a business involving cooking, or making furniture from home, it’s fairly easy to see how this could change your ‘risk’ profile for insurance purposes.

However, the rules are a little greyer when it comes to other areas; working part-time from home sitting at a computer, for example, or occasionally offering head and feet massages.

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.

Key elements for home workers

There are a number of key things you might need to either buy as ‘add ons’ to your existing cover, or possibly take out as additional, separate cover. If you talk to your insurer or insurance broker, they should help you identify exactly what you need:

  • ‘All-risks’ as opposed to ‘household administration’ cover

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.

  • Accidental damage cover

If your current insurance doesn’t include what’s known as ‘accidental damage cover’, you might want to add it. Standard insurance doesn’t usually include cover for accidental damage, so if you inadvertently drop an expensive laptop or knock over a valuable antique while working from home, you wouldn’t be able to claim.

  • Third-party liability

Many people who work from home often have clients visiting the property for business reasons.

If they were to then injure themselves in some way while in your home, or damage their possessions, they might decide it’s your fault and instigate a claim against you.

Adding third-party liability cover to your home insurance would mean you were protected against any such claims.

What might be included in extended cover for home working?

Your insurer might adjust your policy to include your office contents and equipment, portable equipment such as business laptops, loss of earnings due to business interruption, goods-in-transit cover, possessions used for business purposes and any potential legal expenses.

Additional potential cover for home workers

It may be that you also need stand-alone insurance (separate to your home cover policy) in the following areas, depending on the business you conduct from home:

Product liability insurance – This protects you financially from your goods and products causing damage or injuring third parties.

Professional indemnity insurance – If you give advice, having professional indemnity insurance means you’ll be financially protected from clients claiming against you for any losses they feel resulted from bad advice.

Employer’s liability insurance – Some people who work from home employ others and, if so, you may be required to have employer’s liability insurance in case something happens to them while in your home.

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