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Business insurance for home-based companies neglected

19 October 2009 / by Rachael Stiles

Home-based businesses are taking unnecessary risks by not taking out adequate commercial insurance cover, according to research from Direct Line for Business.

The study found that 28 per cent of home-based companies have no form of business insurance at all, with just 12 per cent having sufficient protection if their business was temporarily unable to trade.

Furthermore, only 32 per cent of at-home businesses people have taken out public liability insurance, and just 11 per cent have product liability insurance, putting themselves at risk from claims made against them.

The majority of businesses based at home have not taken out business insurance and leave themselves vulnerable to being unable to cover the cost of a crisis, Direct Line for Business warns.

Kate Syred, head of Direct Line for Business, said: "With so few businesses being protected from a liability claim, or an unexpected pause in trading, this research highlights the need for business owners to think about specific business insurance. Without it, dreams of being a business owner could quickly become a nightmare."

Direct Line suggests that many of those who run a business from their house think that home insurance will protect them if they need to make a claim for their business.

But even if this was the case and home insurance could double up as business insurance, only 32 per cent of home-based business owners have office contents insurance, and 18 per cent are covered for loss of things like tools, mobile phones, and other equipment.

According to Ms Syred, business owners who rely on their home insurance may be in for a shock when making a claim: "Many people set up a business from home because it's a cost effective solution. However, you still need insurance for protection in the event of something going wrong. A standard home insurance policy may have limited, if any, cover and many businesses relying on this could find it difficult when it comes to making a claim."

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