Anyone who runs a business of any description needs to make sure that they have certain types of insurance, normally insurance covering areas of property loss and damage, business interruption and loss of earnings and various types of liability insurance. Anyone working from home as well needs to be doubly sure that there is no conflict between their home insurance and the needs of their business, both from an insurance and a practical point of view.

Historically a person's home insurance policy has always excluded any type of business activity. This stems from a time when there was normally a clear distinction between an individual living at home and travelling to their place of business which would normally be physically separate from their home.

If it was not, and they ran their business either as part of their home I.e. in the case of something like a farm, or their business was part of the physical dwelling where they lived, then that would be clearly expressed in the terms and conditions of the insurance policy.

The reason insurance companies don't like to insure business risks under a normal home insurance policy is simply because it creates an additional area of risk that can sometimes be difficult to quantify. There can be additional risks concerning stock and its value, potential fire risks and other hazards depending on the nature of the stock. If the business attracts customers who will be physically visiting the premises then there can be potentially huge liability risks as well.

The reality of working from home has changed dramatically in the last few years for a number of people. Many people run a business from home that is essentially internet-based, and does not really pose much of an additional risk for the insurance company. Other people will run a business that does have physical issues such as stock and stock value and potential liability risks as well. There are also a number of people who work at businesses that are physically away from the home, but spent part of their time home-based either in addition to the business elsewhere, or as part of it.

A normal homeowners insurance policy will still exclude business risks from the terms and conditions of the policy. However the insurance companies are much more flexible and willing to add various types of insurance coverage depending on the nature of the business. An insurance company will normally also work with the homeowner if a separate business policy is needed.

The real key is to be completely upfront with your insurance company to begin with about any type of work or business that is done from home and seek their guidance as to what is and is not covered under the home insurance policy. They will advise if a separate business insurance policy is needed, whether they are able to provide it or not.

Author's Bio: 

Peter Main is freelance writer who has spent almost twenty years in the insurance industry, working at Lloyd's of London. He writes extensively about home insurance and in particular about how home insurance works in covering buildings, contents, identity theft, liability, and garden and lawn machinery such as garden tractors, snow blowers etc.