Research from small business insurer, Direct Line for Business and Enterprise Nation, reveals that 145,000 home-based business owners have rejected business insurance on the basis that they believe their commercial activities are covered under their home insurance policy.
Home contents insurance can often cover office equipment but it does not offer the full cover home business owners need. By relying on their home insurance alone, many ‘homepreneurs’ are putting their businesses and livelihoods at risk.
The research also highlights that two in every five home businesses are not insured at all. This lack of insurance puts home businesses at significant financial risk. Operators of these businesses may not recognise the potential liabilities they face. Standard home insurance will not necessarily cover stock stored at home and neither will it cover public liability, or loss of earnings due to an insurable event, such as a flood or a fire.
One in seven (14%) home businesses have clients visit their home. If a customer is injured, or has their property damaged during a visit, a lack of public liability insurance could lead to financial and legal obligations that could bankrupt a business.
Jazz Gakhal, Head of Direct Line for Business commented: “Home businesses are booming at the moment; they are creating jobs and local wealth, as well as boosting the national economy by around £300 billion. With that in mind it’s worrying to see that a significant proportion of them have not taken out business insurance to protect their assets.”
“Home Business Insurance can be purchased in addition to home insurance and provides essential business cover for a wide range of businesses operating from home. With Direct Line for Business insurance, this costs as little as £533 a year. That’s less than £5 a month to cover you against the potential emotional and financial loss caused by an accident or theft.”
Almost a third (29%) of home business operators believe they do not need insurance because they are not big enough. However, the size of the business does not reduce their liabilities if something does go wrong. Even a small scale operation could face significant liabilities potentially running into hundreds and thousands of pounds were they to be found responsible for a customer being injured.
Beatriz Garcia-Martinez, who runs SecurelyBe from home, commented: “The insurance world can be difficult to navigate for a start-up business. Depending on your type of business and sector it can require extensive research in to the legalities of business. This is difficult task for small operation to undertake because it can take lots of time and often certain expertise that home businesses may lack.”
“Small business owners need insurers to partner with them from the beginning, to help us understand the essentials we need now and might need in the future.”