If home is where the work is ...

... then make sure you're covered for your equipment, says Stephen Pritchard
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COMPUTERS, faxes and other office equipment are cheaper, better and easier to use than ever before. Unfortunately, insuring a home office is still difficult. If you aren't careful you could end up losing all the home insurance cover you already have.

Taking a company laptop computer home occasionally is straightforward: firms should cover hardware on their corporate policies, and this has no impact on household insurance. Buying a computer or fax for part time or occasional home working is not likely to cause problems either. But it's vital to make sure the equipment's value is within the insurer's limits for home business equipment.

These vary widely. Some insurers automatically include cover for business equipment with a general insurance policy. The common maximum is pounds 7,500, but some are lower. Lloyds Bank Direct Insurance, for example, covers a maximum of pounds 5,000, while Legal & General assumes 10 per cent of the total contents sum is business equipment. For people with few other possessions,this might not be enough.

Other insurers charge an additional premium for business equipment. The cost is assessed on a case by case basis. "The limit is not fixed," explains John Sellors at Royal & Sun Alliance. "We would look at the case, and be more than likely to extend cover. The main advice is to speak to your insurance company."

These extra premiums are not charged on high-risk items in the house that are not for business use. It is no longer the case that an insurance company will automatically assume that a PC or a fax is business equipment: a home computer used only for games or by the children is not an issue. A computer used by a graphic designer is.

If you are planning to become a full-time teleworker or go self-employed from home you should tell your insurer before you start. This is not always bad news. Ray Temple, underwriting manager at Tolson Messenger, a specialist broker, says home workers can be a lower risk, as they are at home more during the day than office colleagues.

The main problem is that underwriters draw a line between a simple home office and a "substantial" business run from home. Anyone with equipment worth more than around pounds 10,000 is likely to be steered towards separate business insurance.

Self-employed people whose business includes valuable equipment, such as graphic designers, photographers, video producers; or expensive stock, for example a jeweller, may find standard cover is not enough. If you are planning to set up this type of business you may hit a problem as some insurers may not want any of this business at all. They argue that the extra hardware makes the property a better target for thieves. This applies even if the equipment is insured separately under a specialist policy, for example for cameras and video equipment, or via insurance sold through the manufacturer. In a worst-case scenario, someone with expensive equipment who is burgled might find they have breached the terms of their insurance and have no contents cover at all, even for personal items.

Lloyds Bank Insurance Direct says that its pounds 5,000 limit applies to all business equipment owned by the customer and kept at the address, even if part of it is covered on a specialist policy. "Under pounds 5,000 is fine," explains Richard Turner, sales and marketing manager. "Over pounds 5,000 it starts to move away from a standard home contents policy."

The insurance companies argue that they have extended their home insurance policies to cover the risks most people encounter. "We have tried to extend our standard policy to take in a reasonable amount of business use," explains Mr Turner. The insurers feel that increasing standard cover any further would mean that everyone would end up paying more to cover the risks faced by a few people with specialist equipment.

Self-employed people who are refused cover by their insurer should try a broker. He or she will identify companies that can include more expensive equipment as part of contents insurance. If this proves impossible, you can move up to a specialist home business insurance policy. Lloyds offers its own home working policy through bank branches. Tolson Messenger also has a home business policy for larger or more complex risks, such as business interruption.

q General Accident: 0800 121004, Legal & General: 0800 282404, Lloyds Bank Insurance Direct: 01202 444000, Royal & Sun Alliance: 0800 300600, Tolson Messenger: 0181-741 8361.