What counts as ‘business use’?

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The number of people working from home has exploded in recent years, rising by half a million to more than 4million, recent figures from the Trades Union Congress show.

use of home for business

But as the numbers switching working in an office for a desk in the spare room rise, many could be unwittingly invalidating their home insurance by doing so.

That’s because most standard policies specifically exclude things associated with ‘business use’ in and around the home.

Additionally, there might be other types of insurance you should consider adding to your policy, depending on the nature of your business and if you have clients or employees who visit or work from your home.

‘Business use’ excluded

The majority of policies don’t allow for ‘business use’ within their terms. ‘Business use’ is often deemed to be anything that’s done from home in a continued or repeated way for financial gain.

With something like carpentry, or baking, it’s fairly clear how this could affect your cover in terms of the risks and types of activities involved.

But if, for example, you’re someone who works part-time from home for a company monitoring online message postings, or occasionally cuts people’s hair in your kitchen, it’s more of a grey area.

The best thing to do if you’re unsure is to speak to your insurer or insurance broker for clarification.

What additional protection do you need to work from home?

As the contents element of an ordinary policy will, in all likelihood, only cover you for what’s often described as ‘administration’ duties, you might need to supplement it with what’s known as an ‘all-risks’ policy.

Your existing policy documents should state in the terms and conditions what ‘administration duties’ for home work are covered. If it’s not clear, again, clarify matters with your insurer.

Adding ‘all-risks’ cover to your existing policy would ensure any business equipment you use, such as particularly powerful computers or printers, is also included.

Whatever the standard of equipment and gadgetry, if it’s being used for business purposes and you try to make a claim for it on your standard cover, the claim could be rejected.

All-risks cover also generally allows for when a business item is taken with you out of the home.

Public liability

Another major concern for those working from home is what happens if you have clients visiting and something happens to them which ends in a legal claim against you.

Let’s say they electrocute themselves after flicking a dodgy light switch, or trip over a poorly positioned rug and break an arm; either situation could end up in court.

Public liability insurance is there to cover you for exactly these types of situation. It protects you against legal claims made by anyone visiting your home in relation to your business due to loss or damage suffered.

Other types of cover you might need:

  • Employer’s liability insurance – Anyone who has employees, even if this is just one person who works for you part-time, will need employer’s liability insurance.
  • Extended car insurance for business use – It’s likely your current car insurance won’t cover you for the times you use your car for ‘business use’ if you’ve become self-employed. You may need to call your insurer or insurance broker to arrange it.
  • Product liability insurance – Anyone who’s business relies on the supply and manufacture of products (which many of those who work from home are involved with, such as those selling things on eBay and Amazon), should take out product liability cover.
  • Professional indemnity insurance – The same applies to those who give advice and supply services which don’t involve physical goods, such as accountants and consultants. Professional indemnity insurance would cover you for any loss or damage resulting from what could be deemed ‘bad’ advice in a court.

Policy Expert

Our dedicated customer service team is always on hand to help – either online or over the phone. Whether you want assistance in finding the right policy or even handling a claim, we make sure it’s all handled by experts. For more information speak to one of our experts on 0203 014 9300 or email ask@policyexpert.co.uk

The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.