Home and contents insurance covers your home and possessions if they are damaged or destroyed, providing homeowners with valuable peace of mind. But there’s also a risk that these homeowners could miss out if they also run a business from their insured home.
How does home and contents insurance work?
When you successfully apply for a home insurance policy, the insurer will agree to cover the cost of repairing or rebuilding your home if it is damaged or destroyed, such as if there is a fire or a flood. A contents insurance policy offers similar coverage for the possessions inside your home, such as your furniture, clothes, and valuables.
The cost of a home insurance policy, contents insurance policy, or combined home and contents insurance policy will vary based on a wide variety of different factors. The size, age and value of your home, the type and value of your contents, as well as the risk of crime and natural disasters in your area, can all affect the insurer’s financial risk, and therefore the cost of your insurance premiums.
How does working from home affect your home insurance?
Working from home can change the financial risk for a home insurer. Depending on the work taking place, it may be more likely that the property or its contents could be damaged or someone could be injured on the property. Depending on your insurer, this may mean your premiums could end up costing more, or your home insurance application could be declined.
Working for an employer from home is generally less likely to affect your home insurance policy than running a business from your home, as employers have certain insurance obligations for their employees. And according to the Consumer Action Law Centre as quoted by the ABC, if you’re working in a home office, whether for an employer or for your own business, you’re likely to be okay.
How can I tell if my side hustle will affect my insurance policy?
Because each insurer assesses risk differently, it’s worth checking with your insurer whether the work you do from home could affect your home insurance. Your insurer will want to know if you have an Australian Business Number (ABN) registered to your address,
In some cases, you may be able to extend your home insurance policy to cover your office equipment, such as the laptop in your home office. However, you may instead be required to take out separate business-specific insurance policies. For example, according to AAMI, some of these policies could include:
- Public liability insurance (if customers or suppliers visit)
- Business interruption insurance
- Accidental injury insurance
- Income protection
- Money insurance (if you’re paid in cash)
- General property insurance
- Machinery breakdown insurance
- Tax audit insurance
Failing to inform your insurer that you’re running a business from your home could risk voiding your insurance policy, which could leave you without cover in the event of disaster. Deliberately concealing your home business from your insurer could constitute fraud, which could risk landing you in legal trouble.
Whether you’re applying for home insurance for the first time or are renewing your home insurance policy, it’s worth comparing the available options and considering which policies could offer you the most value in your personal and financial situation.