If you work from home this could affect the terms of your home insurance policy, so you may need extra cover to make sure that your building and possessions are still protected
Working from home or running your own business from your home office or shed can be a liberating experience, allowing you the chance to do things at your own pace in a comfortable environment and maybe even get a little extra time to be with your family. Working from home has become more common and more people are becoming self-employed, giving them more flexibility.
However, having that extra flexibility means you will find some drawbacks. If you have a home insurance policy, you could be putting it at risk if you have not declared your property as a place of business.
When you fill out any home insurance policy application or enter your details into an insurance comparison search service you will usually be asked about what times of day your property is occupied, if you use it as a place of work and if you receive clients to your home regularly. If your company lets you work from home occasionally then you probably won’t need to declare this as it’s only occasional use and you won’t be getting clients visiting you at home.
However, if you have a home business where you worked at home regularly and had extra office equipment, and have clients coming to your home, then in the event that you need to make a claim the insurer might take a dim view of it because you did not declare you had a home business. As a result this could invalidate your claim, so be sure to mention it.
You might have to pay a little extra on your premiums to insure your home contents and building structure as a result, but in some cases with people who work from home, the premiums go down. This could be because your home is regularly occupied during the times of day when homes are usually empty and thus your home is less likely to be burgled.
The premiums on your home insurance if you work from home could go up because there’s extra office equipment to insure and, if you get clients, generally more risk of accidental damage, fire or theft because you have more visitors to your home.
Extending your home insurance for business use
Insurers see home businesses as a ‘material fact’, which means this is information that is vital to the conditions of your policy. If a material fact is not declared in advance and a claim is later made, the entire policy could be invalidated once that fact is discovered.
Essentially, extending your current home insurance is probably your best bet of getting insurance for working from home. This is usually quite easy to do and is generally cheaper than taking out a specialist work from home insurance policy. But this also depends on the level of cover you need.
You might only need cover for an extra £1,000 or £2,000 on your contents insurance if you have office equipment that needs protecting. This could be to cover stock that you produce at your home, computers and printers, or a specialist chair if you provide beauty therapies at home.
Cover will usually only be for theft, flooding and fire damage on items essential to the business and not things like cash. If your home business means you regularly receive cash at home then you may need to find a safer way of handling it. Cash you keep at home is unlikely to be covered by any insurer, so make sure you have a way of dealing with this.
If your circumstances change during the course of your home insurance term, be sure to declare this as well. For example, you could have a standard home contents insurance policy, which you took out while you were working for your employer. Say, three months later you quit your job to start your own business at home but you did not declare it to your insurer. You would risk invalidating your policy if you tried to make a claim in the future. Similarly, if you had insurance for working from home but you quit your home business and your home was no longer used as a place of work, you could stand to save money on your insurance if you let your insurer know.
Often when extending your insurance for a home business it might cost you very little each year, so it can be a valuable investment and the safer option to avoid invalidating your policy.
Types of insurance for working from home
Most home insurance policies cover business equipment as standard, but not all of them will, so again, check the terms and conditions of the cover before parting with your money. The level of cover you are likely to receive on business equipment will vary significantly between each insurance provider as well, so be thorough in your comparisons — it could save you hundreds of pounds in the long run.
There are three main types of home insurance categories for working from home. These are clerical use, regular business visitors and other business use.
Clerical use is defined as having office equipment at home and working in an office space kind of environment at home. This should be declared but it is unlikely to have a major impact on the cost of your insurance as it is usually used to provide extra cover to business equipment. If you travel regularly for business then make sure your contents insurance covers your necessary equipment when you take it out of the home.
Regular business visitors is, as the name suggests, when you have regular clients at home as part of your regular from work from home activities. If you’re a mortgage broker, massage therapist or accountant where it’s very common to have regular business visitors then your home contents could be considered to be at greater risk. As a result you would have to declare this and it could increase the cost of your home insurance premiums.
Other business use relates to having some other use for areas of your home. For example, you might use your shed to build furniture that you sell or use your kitchen to make food that you sell.
There are other considerations to look into if you work from home. You may also need business insurance, which protects your business, rather than your home. Public liability insurance protects you in the event that someone that makes a claim against you. And you might neeed professional indemnity insurance to cover you if a client holds you responsible for negligent work. For example, you’re an accountant and make a mistake in someone’s tax returns and they receive a fine and hold you responsible. Your public liability insurance might be able to cover you if you had to pay for that fine.