Thursday, November 5, 2009

Cover for home-based SMEs sadly lacking - Direct Line


Research from Direct Line for Business has revealed that many businesses based in the home would not be able to cover themselves in the event of a crisis.

The insurance provider surveyed nearly 900 home-based business owners and found that more than a quarter (28 per cent) had no commercial insurance cover. Only 12 per cent of those surveyed would be protected if their business were unable to trade temporarily and only 32 per cent have public liability insurance, the study found.

Kate Syred, head of Direct Line for Business, said: "With so few businesses being protected from a liability claim or an unexpected pause in trading, this research highlights the need for business owners to think about specific business insurance. Without it, dreams of being a business owner could quickly become a nightmare."

Direct Line also pointed out that many business owners based at home incorrectly think that their normal home insurance covers them in the event of a claim for their business. Research found that 82 per cent of home business owners have home contents insurance but only 34 per cent have office contents cover.

In addition, only 18 per cent are covered for the loss of their tools, mobiles and equipment.

Ms Syred added: "Many people set up a business from home because it is a cost-effective solution. However, you still need insurance for protection in the event of something going wrong. A standard home insurance policy may have limited, if any, cover and many businesses relying on this could find it difficult when it comes to making a claim."

Elizabeth Foran, managing director of home-based Five Star Financial Consultants in Reading, said: "That is probably a pretty true survey. A lot of people who work from home do not cover themselves. I have a certain amount of that sort of cover, but probably not as much as I should have.

"It is perhaps something they [home-based business owners] do not even think about. It is probably at the bottom of their lists and it is something they should give more thought to, especially as more IFAs start to work from home as the cost of office space becomes more expensive."

But Derek Bradley, chief executive of Panacea, the community for small directly-regulated IFA firms, said he would be surprised if the findings were true of home-based IFA businesses. He said: "There are just so many insurances that small IFAs have to have - let's just say in the event of a disaster an IFA has to have a disaster recovery plan if they are working from home.

"I would find it inconceivable that someone whose business is in financial services did not have the cover. From an IFA perspective I would be staggered because there are so many contingencies they have to have in place."