Business risk on the home front: House insurance may not cover work equipment, warns Andrew Bibby

THE GROWING number of people working from home should not assume that their ordinary household insurance will cover their work equipment or business needs. According to David Perfect, director of the London brokers Tolson Messenger, many home- based workers discover that the small print of their policies excludes items used for business only when they come to make claims.

Tolson Messenger launched this week a Home Office Insurance policy, specifically designed for people working from home. The minimum premium of pounds 120 covers up to pounds 7,500 worth of business equipment such as computers and fax machines but includes a further pounds 7,500 'business interruption' cover for the costs involved in carrying on a business after, say, a serious fire. Public liability and employers' liability insurance (a legal necessity if home- workers employ staff) is also included.

About 650,000 people are currently working from home, with a further 1.2 million using home as a business base.

Insurers all insist that they need to be told if people with household insurance start working from home or keeping business equipment there. What happens then depends on the insurer's assessment of the risk.

In some cases, cover for a limited number of work items, such as computers, will be available without extra charge. Other insurers require an additional premium or refuse to cover business items altogether.

Ray Facer, underwriting manager at Legal & General, gives an example. 'If someone has got a PC at home which is used for games but also sometimes for some work, we would be happy to have it insured under household cover. But if someone uses a room at home where they're running a full- scale business we would not offer to insure them in this way.'

His comments are echoed by Stephen Turner, an underwriter at Sun Alliance, who adds that his firm would also consider whether the address was being used by business visitors.

If the insurer is prepared to provide cover, home-based workers are likely to find that household insurance is the cheapest way of insuring work equipment. General Accident, for example, quotes an additional premium of pounds 40 to cover pounds 2,500 of business equipment at a typical London address.

However, Mr Facer argues that this may be a false economy. 'I don't think an insurer does someone any favours by trying to accommodate them with household cover. It's not just a matter of insuring the PC: you may need specialist insurance, such as to cover business interruption.'

Tolson Messenger's Home Office Insurance, which is underwritten by Commercial Union, is an attempt to adapt a standard commercial policy to the particular needs of home- workers.

A similar policy, Home- Work, has been marketed by London and Edinburgh Insurance for some years. However, home-based workers may find that a standard small-business policy is just as competitive. Prudential, for example, currently offers a commercial policy, insuring pounds 7,500 of equipment, for an annual premium in lower-risk areas of pounds 94 (although it will soon pass on this business to Provincial).

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