Knowledge Centre

Home Based Businesses Podcast

17th March 2008 Duration: 4m 41s File size: 2.1MB

The ease and relatively low cost of using the internet to communicate with customers and suppliers has meant increasing numbers of people are now working from home. Matthew Wood looks at why home workers might need business insurance.

The MORE TH>N BUSINESS Podcast with Matthew Wood. There are thought to be about 2.1 million home based businesses in the UK. Matthew Wood – MORE TH>N BUSINESS: Around 60 per cent of home based businesses out there aren’t currently insured so there’s certainly a lot of learning out there for people. Jane Markham – Podcats: That’s a lot of small businesses and they come in all shapes and sizes – from mothers looking after young children and working from home to quite substantial, often family based businesses, with numerous employees. Matthew Wood from MORE TH>N BUSINESS. Matthew: One of the biggest groups we’ve seen recently starting to work from home are the over 50s group – people who’ve been working for large corporates for a long time who feel a lifestyle change is in order and they drop out of the rat race as such and they start working as a consultant from home. Jane: And it’s so much easier being a home based professional nowadays... Matthew: I think there’s a greater acceptance in the business community that you don’t have to have face to face relationship with your consumer to actually have good relationships with them. Jane: The rise of the Internet must have given a huge amount of scope for small businesses at home? Matthew: The most important aspect of that is that it has allowed people to market themselves. Before costs would have come from, maybe, advertising in newspapers and the trade press - which cost a lot of money. On the internet that doesn’t necessarily have to be true. Jane: When you start up from home very often you are just you and a computer and a desk. Your home insurance would appear to cover that side of things. Matthew: This is something that a lot of people do underestimate. They think that their home insurance does cover them for a lot of business risks and business equipment. Jane: But this might not be the case – first stop – check your home contents insurance policy. Matthew: It may actively exclude business equipment from pay outs if you were to have a flood or say fire in your home. And around 60 per cent of home based businesses aren’t currently insured - so there is a lot of learning out there for people. Jane: What are the main risks that people underestimate? Matthew: Every business is different, but I would say that legal risks often stand out for me. Someone might be selling a product from home and that could be being delivered internationally. For example, someone from the States may buy a product off you for their child, a toy for instance, and that might cause them health issues (they might swallow it or there may be some incident because of that product) and that comes back upon you and you are having to deal with international legal systems, rather than the UK ones that you’re familiar with. Jane: And that could be even more expensive than having to deal with a legal problem in the UK which of course you’d want to be insured against as well I imagine Matthew: Of course. And another risk is having employees – a lot of businesses that are run from home will have employees. Jane: And if you have problems... Matthew: An employee tribunal can actually cost thousands and that’s before an actual settlement is made. Even if it turns out that you were correct in this instance and the employee didn’t have just cause to take you to court, a tribunal can still can cost you thousands of pounds and if you don’t have proper cover in place that can hit your pocket. Jane. But insurance is another expense. Matthew: Doing things cheaply can often be the reason why people start a business from home but their insurance doesn’t have to cost as much as it would for a retail premises or a whole office. You might actually find that home based businesses pay lower premiums for their insurance because they don’t have as big a business interruption risk, because there’s only them, a computer and maybe a mobile phone. This means they can set up quickly again should they lose that. And 72 per cent of home based businesses actually work alone and not having staff means they will not require ‘employer’s liability’ which can often mean cheaper premiums. Jane: But each business is different and buying a package off the shelf isn’t necessarily the best option – or indeed possible. Matthew: It’s still quite a fresh market and insurers take time to respond to these things and create packages which are actually useful for these groups. There are still lots of places you can get information on home based business insurance. You can try online as there are a lot of direct insurers out there. A lot of people go to a broker if they are unsure and then, at the end of the day, you can always pick up the phone and say ‘Hi I’m a home based business can you help?’ If you’d like more information about insuring your home based business go to www.morethanbusiness.com or call 0800 294 8505. Calls may recorded or monitored for your protection.

I’m Jane Markham and this is a Podcats production for MORE TH>N BUSINESS.

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