Key points:

• Running a business or side-hustle from home is more popular than ever, but it can put your home & contents policy at risk of being cancelled.
• Any home business that deals with clients entering the premises are at the highest risk.
• Inform your insurer or broker of any business activity run from home, regardless of the size or scale.
• Landlords are also at risk – running a business from a rental property can not only breach the tenancy agreement, but also your landlord’s insurance policy.
• Always refer to your Product Disclosure Statement (PDS) to confirm what you’re covered for. If in doubt, speak with your insurer or broker.

In large part due to pandemic constraints, there’s estimated to be hundreds of thousands of Aussies who have either relocated their small business operations to the home or have set up set up some form of business activity or ‘side hustle’ from home.

According to research undertaken by ING in 2021, nearly half (48%) of us were either already working or planning to work on a side hustle for the purpose of gaining extra income.

However, running a business or side hustle from home – or even just using your address as the business location – can leave you exposed to underinsurance, putting your home & contents policy at risk of being cancelled.

“Customers have an obligation to disclose information to their insurer, including if they are undertaking commercial activity at home, regardless of the size or scale”

Whether you’ve had to transition your small business from the office to your living room, or you sell a few dozen eggs a week from your front gate, or you store your food truck on your front lawn between shifts, it’s absolutely critical that you tell your insurer or broker about it. Because if you don’t and you go to make a claim on your home & contents policy down the road, there’s a good chance it will get denied.

Why? Because an insurer will see this as you not having disclosed all of the information pertinent to your cover. And in the insurance world, that’s a big no-no.
Below are a couple of key considerations for both homeowners and landlords with regards to any business or side hustle activity from the home…

For homeowners

• Depending on the nature of the business, some home and contents policies will pick up the exposure. For example, if your home office takes up less than 20% of the floor space, with no clients coming in and out of the property, most insurers will cover this and include it under existing home and contents policies.
• If your business deals with clients entering the premises, your home insurance cover won’t extend to the liabilities this involves. The home will need to be insured separately and then you will need to look at business insurance for the contents and liability.
• Each insurer offering home and contents insurance uses different underwriting criteria, so it’s important to read the PDS and confirm the products which may be reflected in the scope of cover offered, and the cost. If in doubt, ask your insurer or broker.

For landlords

• Running a business from a rented home considerably increases risks, opening up the landlord’s exposure to loss or damage, and even liability claims. This is why most insurance policies will exclude cover for properties that house a business.
• Operating a business from a rental property is likely to breach the tenancy agreement (using the property for business purposes and not purely as a residence). It is also likely to invalidate the landlord’s insurance policy.
• If the property is governed by a body corporate, check if operating a business from an apartment/unit is permitted. There’s a chance the strata insurance may not permit this.

The bottom line
Running a side hustle from home is a great way to make a little extra cash, and it can go a long way in easing the pressure as the cost-of-living rises. But before you decide to take a ‘she’ll-be-right’ approach, or chance it by ‘asking your insurer for forgiveness rather than permission’, ask yourself whether it’s worth invalidating the insurance on your biggest asset – your home.

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