By Daniel Hunter

145,000 home-based business owners have rejected to chance to take out business insurance because they (wrongly) believe the business is covered by home contents insurance, according to research by Direct Line for Business and Enterprise Nation.

Home contents insurance can often cover office equipment but it does not offer the full cover home business owners need. By relying on their home insurance alone, many ‘homepreneurs’ are putting their businesses and livelihoods at risk.

The research also highlights that two in every five home businesses are not insured at all. This lack of insurance puts home businesses at significant financial risk, Direct Line said. Operators of these businesses may not recognise the potential liabilities they face. Standard home insurance will not necessarily cover stock stored at home and neither will it cover public liability, or loss of earnings due to an insurable event, such as a flood or a fire.

One in seven (14%) home businesses have clients visit their home. If a customer is injured, or has their property damaged during a visit, a lack of public liability insurance could lead to financial and legal obligations that could bankrupt a business.

Jazz Gakhal, Head of Direct Line for Business, said: “Home businesses are booming at the moment; they are creating jobs and local wealth, as well as boosting the national economy by around £300 billion2. With that in mind it’s worrying to see that a significant proportion of them have not taken out business insurance to protect their assets.

“Home Business Insurance can be purchased in addition to home insurance and provides essential business cover for a wide range of businesses operating from home. With Direct Line for Business insurance, this costs as little as £533 a year. That's less than £5 a month to cover you against the potential emotional and financial loss caused by an accident or theft.”

Almost a third (29%) of home business operators believe they do not need business insurance because the business is not big enough. However, the size of the business does not reduce their liabilities if something does go wrong. Even a small scale operation could face significant liabilities potentially running into hundreds and thousands of pounds were they to be found responsible for a customer being injured.

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