Business from home insurance

Home Business Insurance

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A little over two years ago, Enterprise Nation published a report that stated 1,400 home businesses are started in UK homes every week. Of all new businesses started in the UK, over 60% are home based, and this number is surely rising. Key reasons among many people starting a home business include savings, technology available and the option to blend in home life whilst working. More people are saying goodbye to the corporate world and are becoming their own boss in fields like accounting, graphic design, marketing, journalism website developing, online trading, hairdressing, interior design, event planning and more.

There is a lot to think about before a home business is actually launched. A good business and marketing plan is key, as is making sure that there is enough insurance cover to protect the business in the event a mishap occurs that could have devastating consequences or force an owner to go out of business.

It's important to know about the different types of business related cover that a home business may need, and a good home Business Insurance package should include at least most of the following:

Public Liability Insurance

Public Liability Insurance is well worth it if you have a home office that customers and potential clients come to or if you make frequent trips to a customer, potential client or third party's home or other sites. If any third party files a claim against your business for injuries or property damage, Public Liability will likely cover the judgment awarded against your business as well as legal fees involved.

The types of business activities you engage in and the size of your business will most likely dictate the amount of Public Liability necessary to provide adequate cover. Small home businesses will usually opt for £1 million cover. Your insurance broker will offer advice as to what cover would be most sufficient for the home business you are operating. Although not compulsory, many customers and prospective clients will not take on a business unless proof of Public Liability Insurance is provided.

Employers' Liability Insurance

If you work from home with one or more employees, you are responsible for their safety and health. Employers' Liability Insurance is mandatory in the event that an employee or former employee is injured whilst on the job or becomes ill because of the job. This cover helps an employer compensate any employee (past or present) if they file a claim. It will help meet legal fees and compensation payments if a claim is successful on behalf of the employee. Most low risk home based businesses can receive adequate cover with a £5 - £10 million policy. Higher risk businesses usually will go with higher levels of cover. It's recommended that risk assessment and policy options be discussed with your broker to make sure your cover is adequate.

Employers' Liability Insurance became a legal requirement through the Employer's Liability Act in 1972. An employer must show proof of this insurance with a certificate. If a business does not have this cover, it could face fines as high as £2.500 for every day without it. The certificate will indicate the level of cover a business has and company name or names that are insured.

There are a few exemptions to the Employers' Liability Insurance mandatory laws that may apply if your home business is not considered a limited company, your employees are close family members or if you are the sole employee and own 50% or more of the business. Exemptions should always be discussed for clarification with your insurance broker.

Product Liability Insurance

If your home business manufactures or supplies goods to a third party and causes injury or damages to that person or to his property, you could be held legally responsible. You may be liable for a claim even if the product was not made by you, unless you have clear proof of the manufacturer. You may also be liable if the original manufacturer is no longer in business, or if you used your business name or logo on the product or altered the product in any way. Product Liability Insurance protects you by covering personal injury to a person or damage to their property caused by the product you sold. On the average, amounts for Product Liability policies provide between £1 to £5 million of cover depending on the risk involved.

Professional Indemnity Insurance

If you run a home business that offers your knowledge, advice or skills for sale, you may want to consider purchasing Professional Indemnity Insurance. If a client files a claim against you for what they feel is mistaken advice, Professional Indemnity will cover compensation and legal fees should the outcome rule in the client's favour.
Some clients require that any contractor or consultant they work with have at least £5 million in cover. There is also cover available for past work completed that a client may file a claim for at a later date. This cover should be discussed with your insurance broker. Many home business owners like architects, marketing and public relations advisers and other consultants prefer adding Professional Indemnity Insurance to their policy packages for added protection and security.

Business Interruption Insurance

Any home business could experience a claim that might seriously affect day to day revenue. This could leave the business on the brink of failure. Business Interruption Insurance may offer limited compensation for a loss in short-fall gross profits and pay any additional expense a business owner incurs to get a business up and running to the level it was at before the claim.

How To File A Claim

If something occurs that causes your home business to suffer damages, loss, injury or liability that could lead to a claim, you must contact your insurance broker immediately. You must also notify the police if there was an attempted theft, theft, vandalism, malicious damage or anything accidentally lost or misplaced. You must also provide the insurance broker with your expenses in detail regarding the claim.

In the event a third party or an employee indicates they are submitting a legal liability claim against you because of damages or injury, you must immediately notify your insurance broker and submit any summons, letters, writs, prosecution notice or other legal documents sent to you. You should never admit to liability or promise or offer payment unless the insurance company has given written authority to do so.

Remember that every insurance policy is different. ALWAYS read the policy carefully to make sure that it has the right cover for you!

Run your business from home? Click here for a quote for Direct Line

home business insurance

Remember that every insurance policy is different. ALWAYS read the policy carefully to make sure that it has the right cover for you!

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