Why do home-based businesses need insurance?
Disagreements with clients
Even the smallest of firms can face legal action – insurance for business owners who work from home can offer protection.
You’re dedicated to what you do, but sometimes you might miss the mark. If your client suffers financial or reputational damage as a result, they could take you to court. Adding professional indemnity cover to your business insurance can help with the cost of legal fees.
Injuries on your premises
Running your business from home can bring specific risks. A beauty therapist will open their door to members of the public, as will a counsellor. If a customer of your business is injured on your premises while you work from home as a business owner, they could take legal action.
Public liability insurance can help to offset this risk for home-based businesses. For health and wellbeing businesses, this is available as part of combined professional, treatment and public liability insurance.
Data falls into the wrong hands
If you use the internet to run your home-based business, for example as a sole trader or freelancer, hackers could target your private data as you work from home – insurance could help. Suffering an IT failure brings unexpected costs. Plus, self-employed people can fall prey to cyber attacks. This could see sensitive information held to ransom.
Include Hiscox cyber cover in your home business insurance policy and we can work to get data back safely and help cover the costs.
What are the main types of home-based insurance?
Business contents insurance
Your workspace is the hub of your business, even when your empire is locked in the home garage. Business contents insurance helps protect what’s inside. Insure equipment, such as computers, plus business-owned furniture and stock stored at home.
If your equipment is stolen, or damaged by fire or flood, you’ll need to spend time and money to recover. Insurance could help your home business with repairs and replacements, so you can be up and running again in no time.
Professional indemnity insurance
Professional indemnity insurance can support your home-based business with client-related costs. These could relate to complaints and negligence claims.
Any freelancer or business that provides services or gives advice may face court action. A home-based accountant might face claims that bad tax advice lost a client money. A marketing business could face copyright complaints. Insurance can step in to help pay legal fees and meet compensation demands.
Cyber and data insurance
Cyber and data insurance helps to mitigate online risks. Most home-based business owners use the internet in some way, so you could be struck by a cyber attack. This could happen if you click a phishing link, or if hackers target your online shop.
Cyber and data insurance may help to cover the costs of recovering your data. It could also provide replacement hardware so you can get on with business as usual. Having this policy also gives you direct access to our team of cybercrime experts.
What are other types of insurance covers available for home-based businesses?
- Public liability insurance. This could be relevant if your home-based business receives visits from customers or couriers. It can also help if you journey out for work. Anyone can take you to court for injury or damage to their property which you cause.
- Products liability insurance. This can help if you make, modify or sell products from home. If someone complains of injury or damage to their property due to a faulty product that you supplied to them, insurance may help pay compensation.
- Employers’ liability insurance. Often required by law if you employ staff, this insurance protects your business from claims by your employees for work-related illness or injury.
- Professional, treatment and public liability insurance. Does your home-based business administer health, beauty or wellness treatments? This insurance covers a range of situations.
- Portable equipment insurance. This insurance can cover business-owned laptops, mobile phones and tools away from home. It could be useful if they’re lost, accidentally damaged or stolen when you’re out on the road.
If you’re not sure what insurance policies you need, tell us about the business you run from home. We’ll help you find the right combination.
Build my coverDeciding how much business insurance cover to take out for my home-based business
How much insurance your home-based business may need can depend on many factors, including the:
- Size of your business, its client contracts and turnover
- Business-owned items you store at home
- Type of work you do and its risk profile
- Number of employees you have (if any)
- Contractual or industry requirements you’re held to.
Every home business is different, so your risk profile will be unique. If you work as a wedding planner or home-based florist, you might face more public liability risk than a software developer who rarely has visitors.
Similarly, if you perform high-risk treatments at home – like sports massage – you might need extra cover for this.
Certain home-based businesses might feel they need a high level of professional indemnity cover. This can apply if you provide professional services or advice. Consultants and tutors can face lawsuits, even when they operate from home.
When you buy insurance, you’ll be asked to set a limit of cover for each product you add to your policy. This is the maximum sum we may be able to pay in the event of a claim. It can be useful to consider the worst-case scenario for your business when setting this.
Under UK law, employers also need at least £5 million in employers’ liability cover (external link), but Hiscox offer £10 million as standard.
Home business insurance: FAQs
Does my home insurance cover me for working from home?
Most household insurance policies do not provide cover for damage to any items you use for business purposes. They also don't cover claims arising from accidents involving your business visitors or employees. Similarly, they will not offer cover for injuries or damage caused by any products you supply. So, a business insurance policy with Hiscox tailored to what you do and the business risks you might face can help safeguard the work you do.
Do home-based sole traders need business insurance?
Sole traders can benefit from having the right business insurance in place. Whatever your profession, it’s likely that you’ll deal with members of the public and liaise with clients – even if you work alone.
For example, public liability insurance can help protect you should a member of the public make an injury or property damage claim. Meanwhile, personal accident insurance could provide financial support if you or one of your employees suffers an injury.
Do I need to register my home-based business with Companies House?
If you’re a sole trader running a home-based business, you do not need to register with Companies House. You just need to register with HMRC to log your Self Assessment tax returns. If you are running a limited company or a limited liability partnership (LLP) from home however then you do need to register with Companies House.
Read our guide to learn more about the different types of businesses.
Home-based business insurance: articles and guides
How to create a home office
When you run things from home, what works varies from business to business. Read the Hiscox guide to setting up a home office.
Do I need public liability insurance for my home business?
You’ve taken the plunge into homeworking, but customers don’t visit – so, do you need public liability? Get answers with our guide to weighing up the risks.
The small business guide to cyber-attacks
Any company can face a cyber attack, but it can be harder to bounce back if you run a small business from home. Learn how to defend against cyber attacks.