One of the joys often experienced by those who own their own small business is the ability to work from home — no commute, no traffic, no having to be at a specific place at a specific time, and occasionally, no having to wear clothing other than pyjamas.
But owning your own business does leave you open to some liability concerns — namely, what happens if your suppliers or customers injure themselves while they are on your business premises? This key liability issue is no different for small business owners who work from home than it is for those whose business premises are located in an office elsewhere.
Working from home doesn’t negate the need to acquire public liability insurance, especially if you do have people who work in or visit your home as part of your business’s regular dealings.
Let’s have a look at the key benefits of public liability insurance in more detail.
Coverage offered by public liability insurance
Where a business is concerned, a public liability insurance policy protects a business against the costs associated with being found liable for “death or injury, loss or damage of property, or economic loss resulting from negligence”.
You will be considered negligent if it is determined that you could have reasonably foreseen the likelihood of harm. Where public liability insurance is concerned, negligence can relate to a situation in which you are found to have caused or contributed to the following while a person is at your home in the course of business:
- Death or injury, be it permanent or otherwise
- Property damage
- Emotional and psychological damage
- Economic loss
Public liability insurance provides the insured with both legal and compensatory financial support — that is, the cost of defending any such claim, as well as the costs associated with having to pay damages if you are found to be liable for negligence.
As with most business-related insurances, public liability insurance does have its limitations. Such limitations usually come in two forms — a limit to how much an insurance company will pay per claim, and a limit to the total amount an insurance company will pay under a policy.
It is important that you are aware of any such limitations in a policy you already have in place or are considering taking out in order to be certain that the amount for which you are covered would actually be sufficient in the event of a claim. While this is an important part of due diligence when purchasing any insurance policy, it is particularly relevant where a public liability policy is concerned due to the often-astronomical costs associated with being sued for negligence.
Also of note is that it is becoming more common nowadays for public liability insurance to be included as part of other insurance policies you may already have in place or may be considering taking out — such as home and contents insurance, commercial property insurance and business pack insurance.
If you already have such policies in place, check to see if public liability is included and what the relevant limits are. As with a stand-alone public liability policy, make sure that such limits will provide adequate coverage in the event you need to make a claim. It is often the case that the monetary limits applied to public liability when it is packaged with another type of policy will be lower than the monetary limits applied to stand-alone public liability policies.
While it is important in general to minimise the risk of harm to anyone, it is definitely worthwhile you taking the time to do a risk assessment of your home in order to determine any areas or aspects that pose a greater risk of harm to others. Once you know what these risks are, you can take steps to reduce such risks and, therefore, the likelihood of harm and potential claims against you.
Key things to consider
If you are setting up your business and you plan to work from home, or if you already run your own business from your place of residence, these are the key questions you need to be asking yourself in determining whether or not public liability insurance is a policy worth acquiring.
- Do I have suppliers who visit my home as part of my business?
- Do customers visit my home?
- Are there any specific aspects of my home that pose a particular liability risk?
- Am I in a financial position to be able to withstand a liability claim brought against me?
Regardless of whether you have suppliers or customers who work in or visit your home as a one-off, intermittently or on a regular basis, public liability insurance is something anyone who works from home as part of owning their own business must consider.
As always, if you are unsure about whether or not public liability insurance is relevant to you and your situation, discuss your options with a trusted business adviser (one who isn’t affiliated with any particular insurance company). If you do decide to go ahead and purchase a public liability policy, make sure you get at least a few quotes from different insurers and be certain that you understand the variances between policies, their individual terms and conditions, and the limitations of each policy.