The number of people working from home is on the rise, and it’s easy to see why. In a world that’s constantly outpacing itself, flexible working lets you juggle a successful career, childcare and domestic chores with (relative) ease. However, getting your work done from the comfort of your own home isn’t entirely free of responsibility. You still need to make sure you have business insurances, the most important of which are Public Liability and Professional Indemnity.
Cover your business at home
The number of homeworkers in the UK has hit record levels, with around 4.2 million people – or roughly 14% of the workforce – working remotely according to last year’s government statistics. 1.5 million of these workers do their job from home exclusively, meaning they’re never required to go into the office.
So what happens to common business insurances that are often specified in client contracts? Do you still need Public Liability (PL) insurance, for example, to cover you in the event of an accident involving a client or member of the public? Many people assume not, which seems logical when working alone from your home office. However, you could still fall foul of a claim.
Some comprehensive home insurance policies may cover some business-related claims but many either won’t include a clause concerning your work at all or won’t provide the cover you need.
There’re some very specific risks that come with working from home that only insurance designed for that purpose will cover. A client could come to your home and trip on some uneven flooring, injuring themselves and breaking their laptop in the fall - you’d need to be protected from the cost of replacing the laptop, plus compensation for any time your client needs off work for injury.
Public Liability risks at home
Identifying a Public Liability risk may seem a little murky, but think of it as the ‘physical’ damage you could do – directly or indirectly – to business equipment or a client themselves. As soon as a client enters your home, you could be liable should anything happen to them.
Time for some context:
You make a pot of coffee on your electric hob when your client arrives and forget to turn it off. The client places their laptop on the hob sometime later while you take a call, only realising from the smell of burning plastic that the damage has been done. Thousands of pounds worth of computer equipment are now ruined beyond repair and while it wasn’t directly your fault, you could still well be liable.
As a contractor, you’ll probably be familiar with protecting yourself against client claims. However, working from home means that your risk of a claim doesn’t necessarily end with those you work with; a good chunk of homeworker claims involve delivery drivers.
A van driver is carrying a heavy Amazon order into your home when they trip on the cracked front step you’ve been meaning to fix for 6 months. They fall and fracture their wrist, meaning they can’t work for at least 6 weeks while it heals. They claim on your PL for loss of income caused by your lack of workplace maintenance - i.e. your home.
Professional Indemnity risks at home
Much like Public Liability cover, you will almost definitely still need Professional Indemnity (PI) while working from home. 90% of clients will include this particular insurance in their contract anyway and it'll certainly still be applicable, despite not hotdesking or working from an office.
While PL covers the ‘physical’ damage you could cause, PI insures you against any ‘virtual’ damage. Most PI claims are due to an accident or circumstances outside of the contractor’s control, so it's paramount that you have cover.
Your client supplies you with a file containing personal data for thousands of their customers for input after building a new database backend. Your house gets broken into and your laptop is stolen, including all of the sensitive data it currently contains. You could be looking at a sizable Professional Indemnity claim should any of that data be used, as well as damages and loss of business compensation for you client after having to tell their customers about the stolen data.
Risk of a claim doesn’t even necessarily have to be caused by an event or accident. You could make a simple mistake in some designs or miscalculate some financial advice that could result in a claim while working from home.
Other insurance risks at home
You may have seen Lorraine Kelly's recent run-in with HMRC over her employment status and consequential tax payments in the news. That was caused by IR35, also referred to as the off-payroll rules. This is a piece of legislation that targets what the Treasury calls 'disguised employees' - i.e. an employee of a company posing as a contractor for tax benefits.
The off-payroll rules have already made an impact on the public sector and are set to be rolled out across the private sector too in April 2020, so make sure you’re prepared for the legislation change. If you’re found as inside IR35 by HMRC (where they class you as a ‘disguised employee’), you could have to pay up to 25% more NI and income tax each year without any added benefits like holiday or sick pay.