Just because you are running a business from home does not 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.
Having the right policy in place can mean the difference between keeping your business going and total disaster.
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
What type of 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 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?
Talk to a broker about home business insurance
Frequently asked questions
Home businesses are not usually included in home insurance policies, though you might be covered for things like office equipment and furniture. You most likely won't be covered for things like personal injury or liability, so if that's what you're after, then a business insurance policy could be the option for you.
If in doubt, refer to your home insurance policy and notify your insurer that you run your business out of your home.
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.
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.
The approach you decide 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.
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.
Alex Reid is Finder’s business insurance cadet. He has a Master of Marketing from the University of Technology Sydney, with a background in business and sales. When not writing about business insurance for Finder he's a keen scuba diver, recently completed his 200th hour underwater and his PADI Divemaster certification. Before working at Finder he lived in Hangzhou China, where he studied Mandarin and Chinese culture. See full bio
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