Insuring your business when you work from home

Steadfast Technical Broking Manager, Annette O’Brien says it’s important to check the fine print in your policy.

“If you have any doubts, contact your insurance broker who will be able to assess both the type of business you’re running and your individual needs, to advise on the best policy for you,” says O’Brien.

“The Insurance Council of Australia has made it very clear that it’s important to be honest with your insurer if you conduct a business at your home. One thing to be aware of, is that in some cases, if you only have home and contents insurance, and then make an inquiry about coverage for a home business, you may find your existing policy may be cancelled.”

“In one situation, a person based in Canberra who was running a small filmmaking business became concerned when he heard about policies being cancelled if the business was run from home,” says O’Brien. “He rang his insurer and was shocked when they cancelled the policy on the spot without any explanation.”

It is worthy to note that insurance companies cannot cancel policies on the spot. They need to provide an explanation to the policyholder if they intend to cancel a policy or decline a request for insurance cover because the business activity is undertaken from home.

What if you haven’t declared your home-based business?

If you haven’t declared you work from home to your insurer, then you need to do it immediately, says O’Brien. “If your ABN is registered under your current address, then you should check the wording of your insurance policy to see if there is any cover for a home business – which is generally unlikely,” she says.

“Before you contact your insurance company, you can seek the advice of an insurance broker who can provide guidance around the best policy for your needs.”

It is important for the insurer to be aware of your circumstances as there are severe consequences for non-disclosure or misrepresentation, no matter how unintentional your actions are.

“You should also be aware that if you deliberately conceal from the insurer that you are running a business from home, it could constitute fraud, the consequences of which are very serious,” O’Brien says.

Does running a business from home affect home insurance?

Depending on the nature of the business, running a business from home can affect home insurance.

Some home and contents policies will provide cover. If it’s a home office taking up less than 20% of the floor space, with no clients coming in and out of the premises, most insurers will include this cover under existing home and contents policies. However, if your business involves customers entering the building, you’ll need to look into business insurance for the contents and liability after insuring the property separately.

Most insurers, once they can see there is business insurance in place, will then cover the general building under the home and contents policy, but any equipment associated to the business will need a separate cover.

According to Grant Bendeich, General Insurance Broker at NewSure, it’s generally best to seek insurance cover for both home and contents and your business from the same insurer if possible to avoid disputes if you have to claim.

“Some insurance providers do offer combined home and contents with business insurance to cover events such as property damage and theft, which affect both your household and your home business”, says Bendeich.

What you need to know about employees working from home

There are a number of common insurance mistakes people make when running a business from home. Most of them involve people not thinking about the type of insurance they may need.

In some cases, you may be able to extend your existing home and contents policy to cover your office equipment, such as your laptop. However, it is more likely you may need to take out separate work from home insurance policies.

What kind of insurance may you need to run a business from home?

Work from home insurance can include:

• Public liability insurance (this is very important if you have customers or suppliers visiting your home)
• Business interruption insurance
• Workers compensation insurance
• Cyber insurance
• Income protection
• General property insurance
• Machinery breakdown insurance
• Tax audit insurance

Do you have questions about work from home insurance?

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