Perhaps you’ve just converted your spare room into a consultancy space. Maybe you’ve been shipping online orders out of your garage for years. Regardless of what kind of venture you operate, running a business from home rather than leasing dedicated premises can make sense for a number of reasons – starting with reduced operating costs and zero time spent commuting.1
The obvious benefits no doubt help explain why so many small businesses now start from – and operate out of – home in Australia.1 But along with the perks come some risks and some common misconceptions. For example, that you’ll be adequately covered by your home insurance2 if someone breaks in and steals your equipment or stock, or a customer falls and injures themselves while they’re visiting.
So how does it work? Are there some circumstances when a standard home contents insurance policy might cover your business-related items? When might you need to consider a home business or small business insurance policy? And what does home business insurance cover anyway?
Whether you are in start-up mode or have been running your home business for a while and are reviewing your current level of cover, we’ve put together this guide to help clear up any confusion you might have so you can make an informed decision – and hopefully avoid falling into a common insurance mistake.
What is home business insurance?
There isn’t a specific category of insurance called home business insurance, but there are a few different types of small business insurance cover that you might want to consider, or need to consider getting, if you’re running a home-based business.3 We’ll go into some of those further on.
When does working from home become a home-based business?
To work this out, it can help to think about whether you’re working from home for an employer or whether you have an Australian Business Number (ABN) registered to your home address – even if it’s a side hustle.4
So, while there’s no single determining factor, it’s likely that you’re running a home business if you have an ABN, are making or intend to make a profit and if your activity is planned, organised and carried out in a businesslike manner.5
It may also help to remember that a home-based business can be:6
- A place of business – you carry out the majority of your work at home and your clients visit you there
- The base for a business – you might also carry out work at clients’ premises
- The base for an online business – you don’t see your customers in person, but you run your business from home, including storing your stock in trade there.6
How is home business insurance different to home insurance?
Essentially, they provide cover for different things:
- Business insurance – This can help to reduce your business risks and may provide cover for your customers, employees and business assets.7
- Home insurance – This covers your home’s physical structure and permanent fixtures and/or your personal belongings inside the home for events such as fire, storm, flood and theft.8
Does home insurance cover business equipment and activities?
No, home insurance policies don’t usually cover business equipment or activities as standard.3,9
However, in some cases this may vary from insurer to insurer, to be sure, it may be a good idea to speak to them or check your insurance policy for inclusions and exclusions.3
“If you have a home insurance policy with Youi, it’s important to let us know if you plan to start running a business from home so we can help you make any necessary adjustments to your policy,” says Mervyn Hartley, Youi’s Head of Product – Home and Small Business.
“For example, at Youi, if you have a Contents policy with us, there is an option to add cover for your business items – like tools of trade or professional equipment – for an additional cost. But limits apply to this cover, so it’s worth considering whether it’s suitable for your needs.10
“It’s also worth noting that the legal liability cover included in our home building and contents policies doesn’t extend to third party personal injury or property damage related to any business activity.
“While a Youi contents insurance policy doesn’t cover any business or trade stock you might have stored at home, a Small Business Insurance policy with Youi can.”
Does running a business from home affect home insurance?
It might. Running a business from home, or conducting certain business-related activities at home, increases the potential risks of your home and contents being damaged.9
As a result, starting or operating a business from home without informing your insurer may even put you at risk of voiding your home insurance policy.9
Can you bundle home and business insurance together?
No. “While it’s possible to add some cover for your business items to a Youi home contents insurance policy for an additional cost,10 small business insurance and home insurance are essentially different types of insurance,” says Hartley.
“This means they are separate policies and one doesn’t – or can’t – replace the other.”
What does home business insurance cover?
Several types of small business insurance are available in Australia and they’re all designed to provide cover for different events and risks.7 Some common scenarios that might be covered, depending on the policy or policies you choose, include:7
- If someone gets injured because of your negligence
- If one of your products makes someone sick
- If you employ staff and they get injured or sick because of work
- If a client makes a negligence claim about professional advice you gave them
- If your business property, equipment or stock is damaged or stolen.7
What type of home-based business insurance might you need?
It can depend on the type of home business you’re running as well as the type of business risks you might want to cover yourself for. As a starting point, it may help to consider the following questions.
Does your business interact with people face to face?
If the answer is yes, you might want to consider a type of small business insurance called public liability insurance.11
This covers your business if someone gets injured or their property gets damaged because of your negligence,7 for example:12
- If a client visiting your home-based business slips and hurts themselves on a wet floor
- If you accidentally damage a customer’s property while you’re demonstrating how one of your products works.12
It may be useful for any business that deals with clients and customers in person, whether they visit your home business or you visit their home or premises,11 keeping in mind that business owners are legally responsible for damage or injuries to other people or property.13
Without public liability insurance in place, the potential cost of becoming the subject of a legal claim for loss, damage or injury might close some home-based businesses down.14
Does your business make, sell or supply goods?
If you do, a type of insurance called product liability insurance may be a good fit for your business.7
This covers you if any of the products or goods your business makes, sells or supplies injures another person or damages their property7 – for example, if a customer gets an electric shock after buying a faulty appliance from you.3
It may even be useful for you if you’re in the business of repairing or servicing some type of product.7
Does your business provide professional services or advice?
If you do, you might need to consider professional indemnity insurance to help cover the costs if a client makes a claim against your professional advice or services.7
This type of insurance can cover negligent acts, errors, or omissions. For example, perhaps you run a tax agency from home and a client incurs penalties or losses after relying on advice you provided, which they claim was incorrect.3
Professional indemnity insurance could cover:3
- Your legal defence costs
- Your client’s legal costs
- Court awards made against you.3
Do you employ people?
If you answered yes to this one, you’ll need to organise workers compensation insurance.7 This can cover an employee’s medical expenses as well as their wages if they become sick or are injured due to work and need to take time off.15
You can find out more about workers compensation insurance from the regulator in your state or territory:7
- ACT: WorkSafe ACT
- NSW: State Insurance Regulatory Authority
- NT: NT WorkSafe
- Qld: WorkCover Queensland
- SA: ReturnToWorkSA
- Tas: WorkSafe Tasmania
- Vic: WorkSafe Victoria
- WA: WorkCover WA
Do you store stock at your home-based business?
If you do, you might want to consider getting some type of stock, products and assets insurance.7
This could, for example, cover, loss or damage to your stock caused by events such as storms, fire or break-ins.7
Could you afford to replace your business equipment if it was lost, damaged or stolen?
If you couldn’t, taking out some type of business contents and equipment insurance could help you replace vital business equipment, such as computers, tools or machinery, following an insured event.11
Is any type of insurance for business at home compulsory?
Yes, depending on the type of home business you’re running, there are some types of home business insurance that may be mandatory. For example:
- Workers compensation insurance is a legal requirement if you employ people7 – even if you’re a sole trader running a home-based business that employs others.16
- Public liability insurance is compulsory for some businesses, including certain trade-based businesses, depending on where you live in Australia.18,19
- Professional indemnity insurance is compulsory for some occupations, such as tax agents, certified practising accountants and architects.20-22
Does Youi offer business-at-home insurance?
Yes. “At Youi, our Small Business Insurance can provide cover for various types of small businesses – including if you’re running a business from home,” says Hartley.
“Youi’s Small Business Insurance includes public liability and products liability cover as standard.”
From there, home-based business owners can also choose from a number of optional covers to add to a Small Business Insurance policy at Youi, for an additional cost. Some of these include:
- Professional indemnity – with this option, you’re covered for civil liability claims that arise from the professional advice or specialist services you provide to clients.23
- Business property damage – under this option, contents and/or stock in trade stored at your home business are covered for loss or damage caused by an accident or unforeseen event, such as fire, storm, flood or theft. Stock in trade is also covered while it’s in transit to or from your business.24,25
- Business items – this option covers loss or damage to your portable business items, including computers and other tools of trade, anywhere in the world.26
- Business interruption – if an unexpected event temporarily disrupts your home-based business, this helps cover your lost profit and extra operating costs.23
- Tax audit – this option provides cover for the professional fees and charges you might face if your home business is audited.23
How much is home business insurance?
It depends. “The cost of a Small Business Insurance policy with Youi will be determined by a range of factors, including the amount of business liability cover you choose, and we offer multiple liability limits to suit different business needs,” says Hartley.
“You can select from three levels of cover – $5million, $10million and $20million.”
When it comes to public liability insurance, a home business with a relatively low risk profile and low foot-traffic volume might decide to consider a $5million policy.12
However, a $10million or $20million policy could be required if your business has a higher risk profile; plus, some types of home business may require a minimum level of cover.12
So, whether you’re still in the planning phases of setting up a home-based business or it’s been a few months or years since you turned your spare room or garage into your workplace, you’re hopefully a bit clearer on what your insurance requirements might be if you live and work under the same roof.
And, if you’d like to learn more about the cover provided by Youi Small Business Insurance, consider giving our dedicated Small Business team a call on 1300 010 648 or starting a quote online.
Public and Products Liability Insurance issued by Youi Pty Ltd. Consider the Small Business Insurance PDS and TMD to decide if this product is right for you.
1 Source: Thriday – Majority of Aussie Small Businesses Now Run from Home, July 2025
2 Source: Business Victoria – Start a home-based business, March 2021
3 Source: Qld Government Business Queensland – Business insurance, September 2024
4 Source: ABC News – Can working from home void my home and contents insurance policy?, July 2022
5 Source: Australian Government – Difference between a business and a hobby, n.d.
6 Source: NSW Government Small Business Commissioner – Starting a home business, August 2023
7 Source: Australian Government – Types of business insurance, n.d.
8 Source: Canstar – What is home insurance and what does it cover?, April 2025
9 Source: WA Government Small Business Development Corporation – Home insurance and your business, August 2022
10 Additional costs, limits and exclusions apply. For full details, see the Home Insurance PDS.
11 Source: Business Victoria – Find the right insurance, October 2022
12 Source: Sprintlaw – Public Liability Insurance Explained: Why Your Business Needs It, February 2025
13 Source: NSW Government Service NSW – Get liability insurance for your business, July 2025
14 Source: Victorian Chamber of Commerce and Industry – Public liability insurance for SMEs: Do you need it?, February 2026
15 Source: Australian Government Fair Work Ombudsman – Workers compensation, n.d.
16 Source: Australian Government – Sole trader, n.d.
17 Source: NSW Government – Education and Care Services National Regulations (2011 SI 653), September 2025
18 Source: Qld Government WorkSafe – Licensed electrical contractors, March 2025
19 Source: Building and Plumbing Commission – Insurance requirements for licensed plumbers, November 2020
20 Source: Australian Government Tax Practitioners Board – Professional indemnity insurance, April 2026
21 Source: CPA Australia – Professional indemnity insurance, n.d.
22 Source: Australian Institute of Architects – Professional indemnity insurance basics, October 2025
23 An additional cost applies for optional covers. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
24 Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
25 Loss or damage caused by flood, storm or bushfire within the first 72 hours of your policy commencing is only covered in limited circumstances. For full details, see the PDS & Policy Wording.
26 Business Items cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each item is $2,500, up to a total of the Business Items amount noted on your policy schedule per claim, unless a High Value Business Items amount is noted on your policy schedule, in which case the most we will pay for all items with a replacement value of more than $2,500 is the High Value Business Items amount shown on your policy schedule.
