You may have seen recent media reports about insurance issues for a range of home-based businesses across Australia. If you’re starting a business, you can take steps now to prevent your home insurance policy becoming null and void in the future.
Depending on your home insurance policy, you may have cover for your buildings and structures as well as the contents of your home. Running a business from home, or even storing business-related equipment at home, increases the potential risks of your home and contents suffering damage – so your home insurance won’t automatically cover this. In fact, some business owners have found their home insurance policies have become void because of their business equipment or activities.
If you’re starting a business, here’s how to make sure you’re set up from the start to avoid home insurance issues in the future.
Check with your insurer
The type of home insurance cover you have depends on a range of factors including your insurance company, your home and whether you rent or own it, where you live and your belongings.
A basic home and contents policy won’t cover your business. This is because your business will introduce different risk factors, which might include your business activities, employees, equipment and stock – so don’t assume you’re covered by your home insurance or that your insurer doesn’t need to know about your business.
Even if you’re planning to run your business away from home but store your equipment and stock in your garage or prepare your products at home, this could have an impact on your home insurance.
Before you launch your business, speak with an insurance broker to make sure you have the right cover for your needs. Read our practical guide to business insurance.
Check with your landlord
If you rent your home, always check with your landlord before you start running a business from home. Your business is likely to have an impact on your renter’s insurance or their landlord’s insurance, depending on what policies are in place.
If you launch a home-based business only to find out later you’re not allowed to under your lease, you could face some major issues in the future, including costly legal issues. You might also need to stop or relocate your business operations immediately.
Check with your landlord about whether you need formal approval to run your business – and get everything in writing from the beginning so you have clear records of what you have agreed.
Check whose approval you need
You might need formal approval from your local council to run a business from home. Even if you own your home, your local council may have restrictions on the type of businesses you can run from home. The best place to start is to use our free business licence finder to see what licences might apply in your local area, and visit the business section of your council’s website, where they are likely to have specific information for home-based businesses. Different councils can have different requirements depending on your location and type of business.
Find out more
The more you learn about managing risk before you launch your business, the better. As you prepare to launch your business, you might like to:
- Use our free business licence finder to learn what you might need to run your home-based business.
- Consider the benefits of running your business from home.
- Read our 8 steps to starting a business or attend our free Starting a Business workshop.
- Find out more about your legal responsibilities as a business owner.
You can also contact our free business advisory service if you have questions about starting a business or managing risks as you run your business.