Running a business out of your home? Protect yourself with an insurance policy designed for home businesses.
Just because you're running a business from home doesn't mean your home insurance will cover your business risks. You may need a specific insurance policy designed to protect your business from damage, loss, business-related accidents and liability. And when disaster strikes your home and business simultaneously, having the right policy in place can mean the difference between keeping your business going and total disaster.
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What does home business insurance cover?
When shopping for an insurance policy for your home business you need to consider the nature of your business and the potential risks you face. Cover options and features will vary from one policy to the next, but home business insurance policies typically include cover for some or all of the following:
- Public and products liability. This covers your business when a third party is seeking damages for personal injury or property damage that has occurred as a result of your business activity or the products you sell.
- Material damage. Protect against damage to your business building and contents caused by a range of unforeseen events, such as floods or fires.
- Business interruption. This cover protects your business against the loss of revenue resulting from an interruption in your business activities. For example, if a storm causes extensive damage and your business can no longer trade or is forced to operate in a limited capacity, business interruption insurance provides cover for any shortfall in profits.
- Theft. Theft cover offers protection against the theft or vandalism of business property and equipment. You can also elect to take out cover for loss of money, a feature which also includes cheques and credit cards.
- Property. This covers the accidental damage of business equipment.
- Personal accident. If you or one of your employees is involved in an accident that leads to them becoming permanently disabled or even dying, a benefit will be paid under this type of cover.
What isn't covered by home business insurance?
Home office business insurance policies have a number of exclusions. Exclusions on policies will generally differ from one insurer to the next, but claims will typically not be paid if:
- They relate to the destruction, corruption or misappropriation of electronic data
- They relate to damage caused by a computer virus
- They relate to damage caused by a bushfire or a named cyclone
- They relate to your failure to comply with any relevant statutory obligations or laws
- The loss or damage to your buildings, contents or stock occurred while buildings are subject to construction, erection, alterations, repairs, maintenance or demolition.
- They are related to war, invasion, civil insurrection or evolution
- They are for consequential loss of any kind
- They are false or fraudulent
- You, or someone else with your knowledge, intentionally cause the loss or damage
- They relate to acts of terrorism
If you have a home business you may be eligible to get income protection as well. A good way to find out is to speak to an adviser:
What type of home business insurance do I need?
The exact type and level of cover you need will depend on the nature of your home-based business. Ask yourself what risks your company faces. If a potentially damaging event did occur, what would the financial consequences be for your company? Will you need public liability cover for clients and customers who visit your office? Will you need cover for your computer equipment and office machinery? What about workers’ compensation cover, protection against fire and storm damage, or cover for costs resulting from business interruption?
When shopping for your insurance policy, ask yourself these questions:
- Do you have employees? Will they need workers' compensation?
- Do you have vehicles which are used for business purposes?
- Do you offer advice or a professional service to your clients?
- Do you have the cash and resources to survive a business interruption? For how long?
- How much expensive equipment do you have in your home-based office?
- Do you frequently store expensive business-related goods in your home or car?
- Is your home office particularly vulnerable to specific natural disasters?
I have some more questions about insuring my home business
Will my home and contents insurance cover my home business?
- You should never assume that your home and contents policy covers your business as well. Home businesses are not automatically included in home insurance policies. Many insurers will refuse to cover business-related items or equipment just because they are located in your home. If in doubt, refer to your home insurance policy and notify your insurer that you run your business out of your home.
Can I combine my business insurance with my home insurance?
- Some insurers give you the option of covering your home and business in one combined insurance policy. This can often be a cheaper way of covering your business, especially if your business is small or has a low exposure to risk or damage.
Is the cheapest home business insurance policy the best one for me?
- As with most things in life, you get what you pay for. While cost is an important factor in any business decision, just because a policy is cheaper does not mean it is right for you. It’s important to compare the features and exclusions of competing policies in order to determine the true value of each one. A very cheap policy that leaves you underinsured or completely exposed is in reality a very expensive policy.
Should I purchase insurance direct or through a broker?
- Once again, the approach you decided to take is entirely up to you. Some prefer the relatively easy and straightforward process of buying cover direct, while others prefer to take advantage of tailored advice from an experienced broker. Each approach has its own pros and cons so consider your options carefully.
How do I make a claim?
- Your insurance provider will be able to give you instructions on how to make a claim. Claims can often be made online and you will usually need to provide supporting evidence.
Compare quotes from multiple insurance providers and make sure to take the time to read policy documents closely. Compare policy options at finder.com.au and seek assistance from an insurance consultant if necessary.