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If you own your own business, you don't need to be told how hard it is to make money and be successful on your own – but do you know how easy it is to lose it all?

Too many self employed people working at home do not have the right insurance products and are putting themselves at risk – if they lost the ability to earn money they could lose everything. Research released by Direct Line says anyone may find themselves strapped for cash in the event of their business being unable to trade, as only 12% have some form of business interruption cover.

The research also revealed that many businesses based from home are running the risk of not being able to cover the cost of a crisis, with 28% stating they have no form of business insurance at all.

Also, the insurer found that businesses based at home also fall short when it comes to protecting their assets if liable for an accident or product fault. Only 32% have public liability insurance and just 11% have product liability cover, leaving them vulnerable if anyone was to make a claim against them.

Kate Syred, head of Direct Line for Business says: "With so few businesses being protected from a liability claim, or an unexpected pause in trading, this research highlights the need for business owners to think about specific business insurance. Without it, dreams of being a business owner could quickly become a nightmare."

Many self employed business owners based at home incorrectly think their normal home insurance covers them in the event of a claim for their business. Whilst the research found that 82% have home contents insurance, only 34% have office contents cover and only 18% are covered for the loss of their tools, mobiles and equipment.

Business owners who rely on their home insurance may be in for a shock when making a claim because you still need insurance for protection in the event of something going wrong with relation to your business. A standard home insurance policy may have limited, if any, cover and many businesses relying on this could find it difficult when it comes to making a claim. Talk to a financial adviser about the right cover for your business.

SOURCE: Direct Line, 19/10/09

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