MORE than a quarter of home-based businesses would not be adequately protected if their enterprise was to encounter a crisis.

The research, by insurer Direct Line for Business, found that 28% had no business insurance cover at all and just 12% would have a protected income if they were unable to trade because of a problem. Less than a third – 32% – had public liability cover.

Few of those quizzed for the report said they had considered the consequences if they were liable for an accident or a customer claimed against them because of issues with a product they sold.

Most of those without specialist business insurance wrongly believed they were automatically covered by their home contents policies. Although 82% of the business owners in the survey had home contents insurance, just 34% had office contents cover and only 18% were covered for the loss of their tools, mobile phones or other equipment.

Kate Syred, head of Direct Line for Business, said: “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 people set up a business from home because it’s a cost-effective solution. However, you still need insurance in the event of something going wrong. 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.”