smallbusiness.co.uk: Helping your business think big

As businesses seek to cut costs, many are looking to work from home. According to research by business insurance provider Hiscox, 2.1 million businesses are run from home, with 1,400 new ventures launched from a domestic base in the UK every week. However, there are still costs to consider – notably, changes to their insurance and legal status.

Update your cover

Your current home contents insurance policy can be compromised if you work at home. It goes without saying that all your expensive new computer and business-related equipment needs to be listed among your valuable items.

However, what many people tend to overlook is coverage for loss of income. While your old policy is likely to cover building and contents in the event of fire, it’s worth paying an extra premium to cover any loss of business income resulting from damage to your home.

Whether your business provides goods and services or offers consultancy advice, in today’s increasingly litigious market place it pays to get public liability cover. This covers you for accidents (injury and death), for example, if a customer visiting the office, treatment room or studio that you run from home fell down stairs, or for harm done to property as a result of any of your business activities. Professional Indemnity (PI) insurance will cover you for legal representation and legal fees in the event that a customer makes a claim against you for a mistake or negligence.

You can hire employees based from your home office premises however if you do so, employers’ liability insurance is mandatory and you will be fined if you don’t have it.

It is also easy to forget that the level of car insurance you require can also be subject to change, obviously depending on the kind of work you do. If you frequently drive for work and transport an employee or customers in your car, check that your car insurance allows you to drive on business matters.

Health and safety

There are strict laws applying to places of work, including the Health and Safety at Work Act 1974 and the Management of Health and Safety Regulations 1992. Regardless whether you work from home or from an office, identical legislation must be adhered to. If you are working for your own business, you are legally required to create a risk assessment and obtain adequate liability insurance. The Health and Safety Executive produces a simple ‘starter pack’ for new businesses, which includes everything you need to know about your legal obligations and ensure your environment is safe.

You may also have to follow the legal requirements of the smoking ban. If other people attend your home and home-based office, it must be smoke-free and ‘No Smoking’ signs must be displayed. The smoking ban also applies to vehicles that are used for business purposes by more than one person and/or by members of the public.

‘Cutting corners on comprehensive insurance cover is a false economy – you don’t want to wait until you need to make a claim to discover that your old policy doesn’t cover you and are faced with having to replace expensive equipment. Also, many insurance providers allow you to spread your payments by interest-free direct debit to help manage your cashflow,’ says Steve Davis, chief broking officer of Coverzones.

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