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Suing a side hustle - what insurance you need to cover your home-based business

Daily Express logo Daily Express 27/07/2021 Samantha Leathers
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Many people turned their passions into profit during lockdown, whether it be selling cupcakes or running online training sessions. However, few of these businesses have the correct insurance coverage meaning that if the worst-case scenario happens you could be losing out on not just items but income too.

Lockdown forced many people into working and creating new businesses within their homes but these spaces were not built to be business premises, and no matter the business type there is a flurry of potential legal and insurance issues for these businesses.

Whether it be not updating your home insurance policy or not having the correct documentation could lead to many side businesses closing long before they reach success.

Defaqto, financial information experts, compiled the most common risks for side businesses and what cover you should have for them.

Home Cooking

44 percent of current food businesses are home-based and started in the first lockdown, with savvy chefs using their talents and social media to create a thriving secondary income.

However, few of these business have the correct specialist insurance as this type of cooking is not covered by home insurance and may even invalidate it.

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Should a fire start as a result of making products for the business, standard policies will not cover any equipment, stock or damages caused by it.

Additionally, without the mandatory food safety licences you will also be entirely liable should someone sue you for food poisoning.

Crafty Entrepreneurs

Whether it be Etsy, eBay or Shopify, many people have turned their crafting skills and hobbies into a home-based business.

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But a standard home insurance policy still does not cover anything related to the business, but unlike home-cooking it may not devalue your insurance as a whole.

If any damaged contents are deemed to be for business use they may not be covered at all by standard insurance, making specialist insurance the best option.

Personal Training

Many gym employees took to online platforms to continue teaching and training, with some going as far as creating socially-distanced exercise classes in public outdoor spaces.

graphical user interface, text: Blue insurance folders © GETTY Blue insurance folders

Personal liability insurance is needed to prevent someone suing for injuries caused by or during an exercise class or routine.

Alongside this, any trainers inviting people into their homes or gardens for training sessions must be wary of invalidating their home insurance policies.

Rental Income

Platforms like Spare Room have seen a big uptake in people renting out their empty spaces, whether it be bedrooms, parking spaces or storage areas.

Most insurance policies will cover lodgers renting out rooms but other spaces may not be covered.

Theft and vandalism are the key risks in this area and not making your insurer aware of any lodgers could also invalidate your policy.

Specialist Insurance

Standard home insurance does not cover the full extent of any side business, but home workers insurance is specifically designed for independent business owners operating out of their own homes.

These policies operate more like business insurance than home insurance, covering equipment, product liability, business interruption and cover for extra cash that may be in your home due to the business.

There are currently only 10 home worker policies available from:

Ageas, Aviva, AXA, Direct Line, Hiscox, Markel Direct, NIG and RSA.

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