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

We all know that working from home is now considered normal for most business owners with office workers, even if it’s just part-time.  And with 65% of workers saying they would be more productive in a home office than in a company office in 2023 — it’s no surprise. 

But have you ever thought about how remote working can impact the validity of your business insurance policy? If not, we’ve got you covered. In this guide, we break down all the questions you may have around remote working and insurance —  for both you and your employees.

Do you need insurance if you work from home? 

If you run your business from home or occasionally work from home, it’s worth considering what insurance you might need. Not all business insurance is mandatory by law, but some policies are worth having to limit risks and protect your business assets.

For example, if you run a hair salon, you might have some tools, stock and products stored in your home. In this case, it’s worth looking for business insurance to protect against theft, damage, or loss of your tools and products.

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. This applies to businesses that have at least one employee and it covers the cost of employee claims for a work-related illness or injury. 

Even if you run your business from home, you’ll need to take out this type of cover if you employ any staff. The only exception is if you just employ close family members. Although it's no longer a legal requirement in this instance, it’s still worth considering to protect against any possible claims.

If you do have any employees, this cover should be included as part of a general business insurance package and bundled in with other cover for your specific type of business.

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.

Does home insurance cover 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 — so it’s unlikely to cover any products, stock or equipment for business purposes. 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.

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 inform 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.

What business 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 public liability insurance. This policy should cover the cost of any claims made for property damage or injury from someone visiting your business premises. It should also cover the cost of any legal fees associated with the claim.

If you have any employees, then employers’ liability insurance will be needed to cover claims made by an employee who gets ill or injured whilst working for you. Remember, this is a legal requirement for most businesses that have at least one employee.

Although not all types of insurance are a legal requirement for businesses, many are very important to protect against the risks to your business and ensure your back is covered.

Even if you are working from home some of the time, you should also consider if you need these types of cover:

• Professional indemnity insurance - This protects you if a customer sues you for damages because of a mistake in your workplace. 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.
• Commercial building insurance – This protects your business premises, whether you own or rent. Cover can vary per policy, but it can include damage from fire, theft or accidents, or even legal costs.
• Stock and contents insurance - This type of cover protects your goods against theft, floods or fire and is an important consideration for traders, manufacturers and those in hospitality.  
• 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 almost all legal action in the UK, whether the case is brought by you or against you.
• Business interruption insurance - This cover is designed to protect the profits and cash flow of your business if a disaster or event means you’re not able to operate normally. If you take out this type of insurance you need to be very specific about the level of cover. For instance, many businesses with this cover were refused payouts for closures during Covid lockdowns as they weren’t covered for pandemics.

How do I work out the level of insurance coverage I need for my home-based business?

Once you've decided on the types of cover your business needs, you need to work out the level of cover to take out. For instance, if you've one or more employees, the law states you must take out employers’ liability insurance that covers damages of at least £5 million. But what about public liability or stock insurance?

Take out too much and you'll be overpaying for cover you don't need. Too little and your claim might not be enough to cover your costs.

The Bionic team can help you determine the types and levels of insurance your business needs. But it helps to do your homework first, so ask yourself the following questions:

• What are the risks? Consider the nature of your home-based business and identify potential risks. Think about things like your business activities, the value of your business assets, and the potential liabilities you might face.
• Are there any legal requirements? Certain industries or professions have mandatory insurance requirements. If yours does, you'll need to make sure this is included as part of your insurance package.
• Do you need any extra cover? Depending on your specific circumstances, you might need additional coverage beyond the insurance types mentioned above. This is where it helps to get support from Bionic's insurance team.
• Is your business growing or changing? If your business is changing - say you're opening a second premises or starting a delivery service - you need to let your insurer know and make sure your coverage is still enough to protect your business assets and liabilities.

What should I look for in a business policy?

When taking out a new business insurance policy, it’s a good idea to go through these steps to make sure you’re getting the right type of coverage:

Coverage scope

You’ll want to define the scope of the business insurance policy before you sign up. To do this you’ll need to specify the areas or activities the policy applies and make sure it covers all your business activities.

For most small businesses in the UK, the lowest standard of general coverage should be enough, this is normally £1 million. As with any policy, make sure you check the fine print if you’re not sure. Sometimes wording can be down to interpretation, so speak to your provider for clarification if needed.

Any coverage limits

You will need to check the maximum amount your insurer will pay for a single claim — this is known as a ‘limit of liability’. This is to ensure it’s enough to cover the costs of a claim so you don’t end up out of pocket. Generally, the higher the limit, the more you pay for the policy.

For example, in the unlikely event that a fish and chip shop suffers a fire that causes a lot of damage to equipment, machinery or property, the limit should be checked to see if it covers all the costs of the damages.

Policy exclusions

Insurance policies include exclusions — these state what your policy doesn’t cover, so it’s best to make sure you understand what you can and can’t claim for before you take any out. Certain types of risks that may be excluded seem logical — if the UK went to war, for example. But some that are excluded may be important to your specific business, so make sure to read the small print. 

Cost of premiums

A premium is the amount you pay each month (or year) for your business insurance policy. This varies depending on what specific cover your business needs, the length of your policy, and the risk and size of your business, to name a few. 

You’ll need to consider the cost of your insurance premiums when it comes to your fixed business costs — but remember, a lower premium may look good on the surface, but it may not provide the best cover for your business, leaving you open to more risk.

Claim process

Making a claim doesn’t need to be a complicated process, but it’s best to understand how to go about it when you take out your policy. Knowing who to contact to file your claim, what documents you need to provide and how long you should expect for your claim to be resolved will give you some peace of mind in the unfortunate event you run into a crisis.

Customisation and flexibility

We know businesses are always changing, and your insurance policy needs to be able to adapt to that. For example, if you expand your business by opening another location or have a hiring spree, it’s key you can amend your policy to add more buildings or employees as needed. 

How Bionic can help insure your business

If you’re setting up a business from home, or working more regularly at home — you’ll want to ensure your insurance still provides the right cover. 

The easiest way to protect your business against the unexpected is to speak to the team at Bionic — we talk your language and won't waste your time, working with you to just find the right policies you need, with no unnecessary extras.

Call the Bionic team now and speak to our business insurance team to compare quotes from the UK’s most trusted insurers and adapt your insurance to suit the needs of your business.