Current employment uncertainty and a swathe of job losses across a number of Teesside companies have turned the spotlight on the risks to setting up a home-based business, according to an insurance industry expert.
Redundancies at SSI, Caparo, and Boulby Potash Mine alongside Air Products withdrawing from the area and continuing uncertainty surrounding the future of parts of Tata mean that those whose future employment has ended or is under threat may be considering the option of self-employment.
At the beginning, they may not be able to afford to rent or buy business premises so instead will use spare space in their home such as a back bedroom or by creating a‘ work hub’ in the corner of a living or dining room.
But warns Jonathan Willett, a Director at Henderson Insurance Brokers Teesside office, even if a householder already has an office-style area in their home, with a computer and desk, if it starts to be used for commercial purposes, it could invalidate their home insurance.
Mr Willett added: “While the birth of a small business can be a positive step for someone who has been made redundant, it also can be a steep learning curve.
“This is because there will be many unfamiliar procedures, such as arranging business insurance cover, which were taken for granted when working for someone else.”
In Mr Willett’s experience, a common misconception is that the residential insurance policy, which already is in place, also will cover any home working – however, he warns this is not always the case.
He added: “If someone intends to start a business in their home, it is imperative that they let their current insurers know the details otherwise they run the risk of invalidating their domestic insurance.
“Some house insurance policies may cover ‘administrative duties’, but usually running a business from home involves so much more.
“It is likely that even the most basic of business ventures will involve expensive equipment such as a computer, fax machine, photocopier and an iPad, laptop or other such portable technology for use when out on the road or at client meetings.”
Seeking expert advice, such as that of an insurance broker, is vital to making sure an insurance policy package is drawn up that is tailor-made for a business’s needs, he added.