Home Business Insurance: What Cover Do You Need?

Home business insurance is not one product but a set of covers matched to what you do from home: business contents and stock, public and product liability, employers’ liability if you have staff, professional indemnity if you give advice or a service, and cyber if you hold data or trade online. Only employers’ liability (if you employ anyone) and motor cover for business use of a vehicle are legal requirements. Your ordinary home insurance may not cover any of these risks.

Why is home insurance not enough for a home business?

Home insurance is written for a private home. Government guidance on running a business from home says home insurance may not cover business items such as stock or computers, or customers visiting your premises. The ABI also says standard contents cover for money will not include cash that belongs to your business.

There is a second risk. If your insurer asked whether the property is used for business and you answered inaccurately, the insurer may have remedies when you claim. In one published Financial Ombudsman Service decision, a homeowner answered “No” to that question while a business was active, and the ombudsman found it fair for the insurer to cancel the policy from the start, refund the premiums and turn down a water damage claim. Our guide on whether home insurance covers working from home explains the rules.

What covers might a home business need?

The government’s business support service describes the main types of business insurance. This table sets out what each one protects and when to consider it.

Cover	What it protects against	Consider it if	Legally required?
Business contents and equipment	Loss or damage to machinery, tools, stock and essential equipment	You keep stock, tools or equipment at home	No
Public liability	Claims that a member of the public was injured, or their property damaged	Clients visit, or you work at their premises or at events	No
Product liability	Claims that a product you made, sold or supplied caused illness or injury	You make, sell, import or put your name on products	No
Employers’ liability	Claims from employees injured or made ill at work	Anyone works for you, subject to exemptions	Yes, at least £5 million
Professional indemnity	Claims that your advice, work or services caused a client financial loss	You give advice, design or a professional service	No, but contracts may ask for it
Cyber	Losses from data breaches, hacking or loss of digital data	You trade online or store customer data	No
Motor for business use	Use of your vehicle for business	You drive for business, including in your own car	Yes

Do I need business contents and stock cover?

If you keep stock, tools, computers or materials at home, check whether your home policy covers them and, if not, consider business equipment cover. The ABI’s guide for small businesses advises assessing the full cost of your stock and equipment using current replacement prices. Setting the sum insured too low can reduce what you receive on a claim, which we explain in underinsurance and the average clause.

Example. Hannah makes candles in her kitchen and sells them online and at weekend markets. She keeps boxed stock in her garage and has a part time helper two afternoons a week. Her cover list would include business contents for stock and equipment, product liability for the candles, public liability for the market stalls, cyber for her online shop and customer records, and employers’ liability for her helper.

Do I need public and product liability insurance?

Public liability is not compulsory, but the government’s business support service says almost all businesses need it. If clients come to your home, the Occupiers’ Liability Act 1957 means you owe them a common duty of care to take reasonable care that they will be reasonably safe. If you work at other people’s homes or premises, you can be liable for injuring someone or damaging their property there. See public liability insurance for sole traders.

Product liability is relevant if you sell physical goods. Under the Consumer Protection Act 1987, where damage is caused by a defect in a product, the producer, anyone who puts their name or trade mark on it as if they were the producer, and the importer into the United Kingdom can all be liable. A supplier can also be liable if asked to identify the producer or its own supplier and it fails to do so within a reasonable time. Read more in product liability insurance.

When is employers’ liability compulsory for a home business?

As soon as you become an employer you must hold employers’ liability insurance from an authorised insurer, covering at least £5 million. You can be fined £2,500 for every day you are not properly insured, and £1,000 if you do not display the certificate where employees can see it. Since 1 October 2008 you have been allowed to display it electronically, as long as employees know where to find it.

There are exemptions. You do not need it if you only employ close family members, but the HSE says this does not apply to family businesses incorporated as limited companies. A company whose only employee is its owner, holding 50% or more of the issued share capital, is also exempt. Our page on employers’ liability insurance for one employee covers the details.

Do I need professional indemnity insurance?

Professional indemnity protects you against claims that your advice, work or services caused a client financial loss. Bookkeepers, consultants, designers, tutors, IT contractors and other service businesses can all run from home, and a mistake in their work can cause a client a large loss without anyone being injured. Public liability does not deal with that kind of claim.

Check whether a client contract or a professional body you belong to asks for professional indemnity, and at what limit. Our guide on what is professional indemnity insurance explains how it works.

Do I need cyber insurance?

Small businesses are targeted as well as large ones. The government’s Cyber Security Breaches Survey 2025/2026, published on 30 April 2026, found that 43% of businesses identified a cyber security breach or attack in the previous 12 months, including 42% of micro businesses and 46% of small businesses. Phishing was the most common type, experienced by 38% of businesses. While 47% of businesses were insured against cyber risks in some way, only 10% held a specific cyber security policy.

If you store customer details, you may also have to pay the Information Commissioner’s Office a data protection fee unless you are exempt, and this applies to sole traders too. See cyber insurance explained.

What else should I check before I start?

• Permissions. You may need permission from your mortgage provider or landlord, and from your council if you expect lots of customers or deliveries.
• Business rates. You may have to pay business rates on the part of your home used for business, depending on whether the Valuation Office Agency has given it a rateable value.
• Health and safety. Government guidance says you need to manage health and safety as you would with any other business.
• Your car. If you drive for business, tell your motor insurer, because that use must be insured.

Frequently asked questions

Is home business insurance a legal requirement?

Not as a single product. Employers’ liability is compulsory if you employ anyone not covered by an exemption, and motor cover is required if you use a vehicle for business. The other covers are optional in law, though clients, landlords or lenders may ask for them.

Can I add business cover to my home insurance?

Some insurers may be able to note business use or extend a home policy, but what that covers depends on the policy wording. If clients visit or you sell products, you are likely to need separate liability cover.

Do I need employers’ liability if I am self employed and work alone?

No, if nobody works for you. If you take on even one employee, the £5 million minimum applies unless an exemption fits, such as employing only close family in an unincorporated business.

What affects the cost of home business insurance?

The price depends on what you do, your turnover, the value of stock and equipment at home, whether clients visit, whether you make or import products, how many staff you have, the limits you choose and your claims history.

Can Solar Protect arrange home business insurance?

We are an FCA authorised insurance broker and we will look for cover that fits how your business works. Ask us for a quote through our business insurance quote page, or call 01795 841 310, Monday to Friday 9am to 5pm.

More on business insurance. Ready for a price? Ask for a quote or call 01795 841 310.

Sources

• www.business.gov.uk: Insuring your business
• GOV.UK: Run business from home
• ABI: Common questions about home insurance
• Financial Ombudsman Service: DRN 5817534
• ABI: Smeinsuranceguidejanuary2026
• legislation.gov.uk: 2
• legislation.gov.uk: 2
• GOV.UK: Employers liability insurance
• HSE: Hse40
• GOV.UK: Cyber security breaches survey 20252026

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 November 2026. Solar Protect is the trading name of Solar Insurance Services (Medway) Limited, authorised and regulated by the Financial Conduct Authority. This page is general information, not personal advice.