A huge number of the more than 2.5 million businesses operating in Australia start life at home. One statistic indicates more than half (51 per cent) of small businesses are born at home. But working from home doesn’t mean you shouldn’t consider home business insurance.
Running a business from home can give you a huge amount of freedom. It can be a great way to balance work and family life. It can also be a stepping stone as you transition from working full time for someone else into running your own venture. And it can be a fantastic way to start that side hustle you have always dreamed of running.
Operating a business from home brings a unique set of challenges, particularly when it comes to insurance. Many entrepreneurs assume their standard home insurance policy will cover their home-based business, but this may not be the case. Understanding the specific insurance needs when starting a business and specifically for home-based businesses is crucial to help protect your venture from unexpected risks.
Assess your current home insurance policy
The first step is to explore the cover your existing home and contents policy may offer your business.
A typical home and contents insurance policy covers property, liability and the structure of your home. It’s designed to help protect against the impact of common perils like fire, theft and natural disasters. But, it may not extend to business-related activities or equipment.
Limitations of home and contents insurance for business use
Home insurance policies often have limitations and exclusions for business activities. For example, if you use part of your home for business, your policy may have coverage limits on business property. Also, liability coverage may not apply to business visitors or clients. These limitations can leave significant gaps in protection for home-based entrepreneurs, leaving your small business under-insured.
Additional insurance options for home-based businesses
If your existing home and contents policy doesn’t cover your business, you may need to explore other insurance options.
A business pack insurance policy designed for home-based businesses typically includes a range of insurances to protect against various risks.
- Property insurance: may cover the cost of repairing or replacing your business property like computers, inventory or furniture if they are damaged or stolen.
- Business interruption insurance: may provide financial support if your business can’t operate due to an insured event, helping to cover ongoing expenses and lost income.
- Public liability insurance: may protect you if someone is injured or their property is damaged because of your business activities and you’re found to be legally liable.
- Product liability insurance: similar to public liability but may cover claims if a product you’ve supplied causes injury or damage.
- Professional indemnity insurance: may cover legal costs and compensation if your business is sued for professional negligence or making a mistake in your professional services.
- Workers’ compensation insurance: mandatory for any organisation with staff, this may cover your legal liability for compensation to employees if they’re injured at work or fall ill due to work.
- Cyber insurance: may protect against the financial risks associated with data breaches, cyber-attacks and other digital threats.
Regularly review and update your cover
As your business grows and evolves, so do your insurance needs, so it’s important to regularly review and update your cover to ensure it remains adequate. Changes in business operations, buying new equipment or an increase in client interactions can all impact your insurance requirements.
Operating a home-based business can offer many advantages, but it can also require a careful consideration of your insurance needs. Standard home insurance policies often fall short in covering business activities and assets. Exploring additional insurance options may safeguard your business against potential risks. Talk to an AIB broker today about whether your home-based business can be protected.
Important notice
This article is of a general nature only and does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker as to whether these types of insurance are appropriate for you. Deductibles, exclusions and limits apply. You should consider any relevant Target Market Determination and Product Disclosure Statement in deciding whether to buy or renew these types of insurance. Various insurers issue these types of insurance and cover can differ between insurers.
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Important notice – Steadfast Group Limited ABN 98 073 659 677
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
Information is current as at the date the article is written as specified within it but is subject to change. Steadfast Group Ltd and Steadfast Network Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.
