Does running a business at home impact your insurance?
Running a business from home is becoming increasingly popular due to the increased flexibility, absence of lengthy commutes and lower operating costs.
However, it is important to be aware of how this setup impacts your current Home and Contents insurance policy.
It is not uncommon for business owners to assume that their business operations, contents, and tools are fully covered under their Home and Contents Insurance. However, this is typically not the case.
Running a business, or even storing your business equipment and stock at your home, introduces different risk factors that your home insurance may not automatically cover. While some insurance providers may offer combined policies, in most cases your business activities and equipment will likely need to be insured separately from your home and contents.
When taking out a basic Home and Contents policy, you must declare that you do not use your home premises for business, trade, or professional purposes (not including home offices). Many policies will exclude cover based on business being conducted at home.
If you don't provide this information or unintentially overlook the declaration when arranging your insurance, this can leave you unprotected or in a position where an insurer may refuse or reduce your claim on your Home and Contents policy. You also risk your policy being voided, exposing your high-value personal assets to risk.
Insurance for your Home Business
The type of insurance you may need can depend on the nature of your business activities and what risks your home business could be exposed to.
Some examples of cover you may want to consider include:
- Public Liability Insurance - If customers or members of the public are visiting your home for a business purpose, then Public Liability Insurance is worth considering. This will help to provide protection if a third party is injured, or their property is damaged due to your business activities.
- Product Liability Insurance - Do you make your business products from home? Product Liability Insurance can help cover your business in the event your product malfunctions, or there is a fault that causes harm to your customers.
- Machine Breakdown - If you have tools and equipment that are essential for running your home business, they are unlikely to be covered under your Home and Contents policy. Machine Breakdown Insurance can help protect you if your equipment breaks down or needs to be repaired or replaced.
- Cyber Insurance - Your Home and Contents Insurance typically covers the computer you use for both home and business activities, but if you lose data or IT systems or suffer a cyber security breach, the costs associated with those events won't be covered. This is where Cyber Insurance can help.
- Professional Indemnity Insurance - Do you provide professional advice or services from your home? Professional Indemnity Insurance can help protect you from the legal costs and claims for liabilities associated with allegations of negligence, professional misconduct, breach of duty, or incorrect advice you provide to a third party.
- Business Interruption Insurance - This type of insurance can help protect your business in the event of loss or damage that results in a reduction in business turnover or temporary business shutdown.
How Coverforce can help
Every business has unique risks. Speaking with your broker can help you to determine exactly what you need to cover and what insurance is the most suitable for your specific circumstances.
If you haven't already, get in touch with your local Coverforce Office today and speak with one of our expert insurance brokers.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly
REFERENCES
- https://www.smallbusiness.wa.gov.au/blog/home-insurance-and-your-business
- https://www.aami.com.au/aami-informed/inside-a-business/insuring-a-business/business-from-home-what-is-and-isnt-covered.html
- https://www.gio.com.au/know-more/insuring-your-business/insurance-considerations-when-running-a-home-business.html
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