Do you need business insurance when you’re working from home?

2 in 5 people across the UK work from home (at least some of the time). And this hybrid approach has become the new norm for many, including some business owners.  

Whether you're a freelancer, self-employed, or running a small business from your spare room, you might think your standard home insurance has you completely covered. But the reality is - it probably doesn't. 

Why? Let's break it down. 

Standard home insurance just isn’t designed for business activities 

This means if something goes wrong – like damaged stock or a client injury, you may not be covered if a claim comes your way.  Even worse, you may have to pay the costs of compensation yourself.  

That’s why understanding what insurance you might need when running a business from home could save you from costly mistakes and help you get the protection your business needs – even if that's from the kitchen table.

Does my home insurance cover me while working from home? 

A personal home insurance policy is unlikely to cover working from home, especially if you are a business owner.  

In general, home insurance only insures the items you own. For example, if you turned your house upside down and gave it a shake, anything that falls out would be covered by contents insurance. Everything that remains attached would be covered by buildings insurance. But it's unlikely that any products, stock, or equipment used for business purposes would be covered. 

If this is the case, it might be best to take out a business insurance policy on top of your existing home contents insurance.  

If you only have home insurance and you’re wondering what other cover you need, then speak to your insurance provider or get in touch with us at Bionic, and we’ll be able to help with your specific situation. 

But that’s where business insurance could come in. Not all business insurance is mandatory by law, but some types of cover, like public liability insurance, may be worth considering.  

Is business insurance a legal requirement for businesses that run from home?  

Employers’ liability is the only insurance that’s a legal requirement for most businesses in the UK if they have employees. It can help cover the cost of employee claims for an illness or injury due to carrying out work. 

Not all insurance types are legally required, but are worth considering if you want to protect your business.

Do I need to tell my insurer if I'm working from home? 

It’s important to tell your insurance provider if you work from home, especially as a business owner. This is to ensure you have the right cover that fits the needs of your business.  

You should tell them in the following circumstances: 

• You have purchased stock or business equipment, and you’re storing them at home 
• Your business sells or creates products from your home 
• You have customers visiting your home for services — for nail or hair treatments, for example. 
• You have extended or adapted your home for business use. For example, building a home office in the garden. 

Do I need business insurance for employees who work from home?  

If you have any employees, by law, you must take out employers’ liability insurance that covers damages of at least £5m. This applies to employees who work at your business premises but also if they work from home.  

Most policies will include cover for your employees working from home, but it’s best to double-check the policy wording or ask your insurer if you’re unsure.  

For example, workshop insurance may include employers’ liability insurance along with public liability insurance and other types of cover like business contents insurance.

When do I need to get business insurance at home? 

There are many situations where your work and home life can blur – but in many situations, you may need dedicated business cover:  

• Storing business stock or inventory at home - If you keep products for sale, materials, or supplies beyond basic office equipment, this counts as business stock. Your standard home insurance won't cover it. 
• Having clients, customers, or other business visitors - If people visit your home for business purposes, you should consider public liability insurance. This can help protect you if someone gets injured on your property during a business visit. 
• Using specialist equipment or expensive technology – Have a £3,000 computer setup, professional camera gear, or special machinery? Standard home contents insurance won’t cover business equipment so you should consider business cover.  
• Modifying your home for business activities - Converting a garage into a workshop, building a studio, or making structural changes for business use could mean your buildings insurance may need updating too. 
• Employing staff – even one person - This is non-negotiable. UK law requires employers' liability insurance if you have any employees, regardless of where they work. 

Why can’t I just use standard home insurance? 

Standard home insurance policies exclude business use for good reason. Running a business from home changes your risk profile, this means insurers may see more risks!  

You might have more valuable equipment, more visitors like supplies or customers, or even hazardous materials that wouldn't normally be in a residential property – especially if you are a tradesman. 

When does regular home insurance fall short? 

Imagine if a client trips on your doorstep during a business meeting and suffers an injury, or if your laptop containing client data gets stolen. Maybe you're a baker and your fridge full of cake orders stops working overnight and they spoil. You need the right business cover to help protect you from a claim in any of these instances.

A real-life example of how standard home insurance fails 

Imagine you run a bakery from your home and don’t tell your insurer. One day, when baking an order of cupcakes, your oven malfunctions and sets on fire. Learn more about bakery insurance. 

You need to make a claim, but when you contact your home insurer, they denied the claim and then cancelled your policy due to non-disclosure. 

Remember, always tell your home insurance provider if you are running a business at home. 

What type of insurance do I need if I work from home? 

As a business owner, if you work from home and have clients, suppliers, or members of the public visiting your home for business purposes, then you should consider taking out home-based business insurance. 

This is a package of cover that can be tailored to your home-based business, it could include: 

• Public liability insurance - Public liability insurance can help cover the cost of claims if someone gets hurt or their property is damaged because of your business.  
• Professional indemnity insurance - This protects you if a customer sues you for damages because of professional negligence or due to a mistake in your work. For example, if you are a solicitor and provide legal advice, this cover can protect you if a client suffers financial or even reputational loss and wishes to sue you.  
• Stock and contents insurance - This type of cover can help protect your goods against theft, floods or fire and is an important consideration for traders, manufacturers and those in hospitality – especially if you store stock at home. 
• Product liability insurance – This covers you in case a product you have sold, manufactured, or designed injures someone or damages something. 
• Legal expenses insurance - This insurance will protect businesses against the cost of most legal action in the UK, whether the case is brought by you or against you. 
• Business interruption insurance - This cover is designed to help protect the profits and cash flow of your business if a disaster or event causes material damages and you're not able to operate normally. 

Will my home insurance premium increase if I work from home? 

It's possible, but it may not be as much as you think. Telling your home insurer about business activities could potentially increase your premium because you have more risks. Remember, always tell your home insurer if you work from home, you won’t be able to make a claim if you don’t. 

How working from home affects premiums 

Several factors may influence whether and how much your premium increases: 

• Type of work - Office work that is generally lower risk (like writing, consulting, or design) may be seen as less risky than some other trades. High-risk activities (manufacturing, a food business or storing chemicals) may be more likely to increase premiums.) 
• Visitors - Occasional client meetings in a home office may seem less risky than running a bakery or salon in your home, where supplies, stock and even customers could be present. Learn more about salon insurance. 
• Equipment value - Adding £500 of business equipment could affect your home contents value, so it’s worth checking this. 

What should I do if my home-based business grows or if I hire remote staff? 

Growing your business can be exciting, but it can also bring new insurance needs.  

If you move from running your business from a spare bedroom to converting your garage or building a garden office, make sure you tell both your home and business insurers. These changes could affect: 

• Buildings insurance (structural changes need declaring) 
• Planning permission requirements 
• Business rates (you might become liable) 
• Scope of cover (more space often means more equipment and stock) 

Increasing stock levels or equipment 

As your business grows, and you sell more stock – you should tell your insurer so they can increase your level of cover. 

Taking on commercial contracts 

Some clients may require proof of specific insurance before working with you.  

Depending on what area you work in - professional indemnity of £1 million or public liability of £5 million could be common requirements. 

If a contract demands higher limits than you currently have, you should contact your broker or insurer to talk about increasing your cover limits. This is usually a straightforward process. 

Making insurance work for your home-based business 

The bottom line? If you run any kind of business from home – even part-time – you should think about finding the right business insurance, as it’s unlikely you’ll be covered by your home insurance. 

At Bionic, we can help sort your business essentials – from insurance and energy to broadband and phone. Start a quote online today to compare business insurance quotes.