Q: One of my clients runs their own business from home, what protection options are available to him?
A: Many standard home insurance policies will tend to provide cover for ‘working from home’ as long as it is in a purely clerical basis i.e. paperwork and administrative duties. The line gets crossed however for clients running their entire business from home.
Your home working clients may not realise that they are risking their livelihoods by not having the correct level of protection in place. Clearly as a broker you have a duty of care to ensure your clients are advised of the most appropriate policy for them – you want to ensure they get the right cover and failing to do so could see a claim against you on your professional indemnity.
There are two main areas that need careful attention; most home insurance policies will not cover any public or employers liability for the business activity; and many policies may not cover (or have limited cover for) business equipment, such as a laptop, phone, printer, etc.
In addition, many insurers will exclude losses due to theft/damage if clients/customers/suppliers visit the home. Don’t let your clients fall into the trap of thinking that because they only have the occasional business visitor it won’t make any difference to their cover. Even one meeting would count and could cause major problems should the worst happen and they need to make a claim.
Some clients may think that they will be able to make a claim for business equipment on a home insurance policy by saying it was their own personal equipment. However, with the ever increasingly sophisticated and stringent anti-fraud measures insurers have in place it is increasingly less likely that the incorrect cover would go undetected.
Not being fully honest and open with the insurers can at best lead to having their policy terminated with the knock on effect that they then have to disclose this to future insurers, and at worst could lead the insurer to pursue the matter through the police as fraud.
The first point of action when discussing home working cover for your clients is of course to check with their existing home insurance provider; explain their individual circumstances and check if their current policy cover is adequate.
If it is not, then it is time to look at specialist ‘homeworker’ policies that provide not just home insurance cover but also public liability, stock and equipment cover in relation to the business. And of course, if they employ anyone, the business must have the all important employer’s liability cover that is a legal requirement.
It is highly unlikely that you will be able to quote and buy this online; it is a bespoke policy and your client will not fit the narrow parameters set by online offerings. In order to provide the right product, delivering the right level of cover at the right price requires a ‘true broker offering’ so you are best off speaking to your GI provider directly.
They will be able to advise on the right solution for even the most complex of business risks. In addition, they will support you through the process to ensure you get the very best cover for your client at a competitive premium.
Relying on home insurance may sound to some like a cheaper option to keep business costs down, but clients will quickly feel the financial strain should a claim occur that their home insurer will not settle.
