If you found yourself suddenly working from home during 2020, you were among many. By April, 51% of the U.S. workforce was working remotely due to the COVID-19 pandemic.
For many, this was their first time working somewhere other than the office. Companies and employees had to adapt quickly when switching to a work from home model. And while businesses found that productivity remained high, other workplace considerations extend beyond collaboration and access to workplace apps.
Essentially, your home is now your formal workplace. When you are in an office, your company’s insurance offers some protection if something happens to you during the normal course of doing your job. But what if something happens while you are doing your job… and you are at home?
We’re going to break down the risks you face as a work from home employee and the role that your homeowners insurance plays.
Potential Risks When You Work From Home
Workplace accidents happen all the time – even when working in an office. From tripping over a desk or wires to slipping on wet floors, workplace injuries are common. They can lead to worker’s compensation claims.
Injuries can also occur due to the ergonomics of the office. Bad lighting or a poor workstation setup can also lead to injury.
Many of these same risks can occur when you are working from home. You could fall down the stairs while talking to a client. Your desk chair could lead to problems within your shoulders and back, especially if you had never intended to spend eight hours per day at your home desk.
Your Company’s Business Insurance
A fairly large distinction between working in an office and working from home is that work from home employees don’t necessarily confine themselves to a dedicated office space. They may not have a space available or may move around during the day.
If you are a full-time employee, your employer’s business policy should have company liability insurance for their employees’ work and cover business-owned equipment with commercial property insurance. These would cover things like a work-related injury or theft of company equipment that occurs in your home.
However, you should check with your employer – and your homeowners insurance agent – about coverage if you are a part-time employee or are using personal devices for work.
It never hurts to ask. If you have concerns about your employer’s coverage, reach out and ask for clarification. This is particularly important if you are working for a small business that may not have the same coverages as a large company.
Insurance Coverage for Independent Contractors
If you are an independent contractor, you are a business owner. Legally, you are responsible for all expenses out of pocket, such as taxes, equipment, inventory, and more. This also applies to having the right insurance coverage to protect yourself.
If you were previously working in an office and now completing work from your clients from your home, your liability and risk exposure have dramatically changed with using your home for business purposes. A homeowners policy will not be enough to cover potential claims if you are an independent contractor working from home.
Not only do you risk that your homeowners policy may not cover your business operations, but you also risk voiding portions of your homeowners policy.
In addition to independent contractors liability insurance – which you may have already had to cover your liability when working in your clients’ office – you need to consider that your business now operates from your home. From protecting your home if clients are visiting or protecting your business equipment, you may need a business owners policy to ensure you are covered.
Insurance Coverage for the Self-Employed
If you are self-employed and working from home, you have several aspects to consider. First, if you were previously working in an office and now at home, you have the same considerations as an independent contractor. Second, if you have employees and they are now working from home, you have the same considerations as any employer for protecting your employees if they are injured or damage your business equipment in their homes.
You will need to review your business owners policy and how it will protect your remote employees. You cannot assume that the employee’s home is safe from risks or potential injuries. Far from it, you cannot be assured (or require) that they stay confined to a particular in-home office while working.
You also will not know if your employee’s have homeowners insurance that protects the equipment. While a homeowners policy may protect damaged or stolen office equipment, you will not know if each of your employees has this type of coverage. If your employees are renting, they may not have any coverage.
It is your responsibility as a self-employed business owner to ensure your business owners policy has the necessary coverage for your remote employees.
Potential Exposures When You Work From Home
Not only do you face risks of injury when working from home, but you have some potential exposure to liability that may not have occurred otherwise. Since your home is now your office, some activities may be happening that didn’t exist before.
These exposures can occur for employees of a company but are even greater risks if you are an independent contractor or self-employed.
You may have business inventory delivered to your home, and you are storing that inventory until it can you can deliver it to a client. But what happens if there is a fire in your home that destroys business property?
Your homeowners insurance policy may not cover business property or may have limited coverage.
You may be meeting with clients in your home if your office is closed. While your homeowners insurance would normally cover injuries to guests, what happens if a visitor is injured while on your premises for business purposes?
You risk liability for medical or other claims if someone visits your home and is injured while conducting business.
Equipment used for work can be tricky. For example, if you bring your equipment from the office to your home and the equipment is damaged, your homeowners policy may cover the equipment. However, there are limits on the coverage, and if you now have all of your equipment at home, it may not be enough.
If a fire occurred in your home, think about all of your business equipment, including:
- Cell phone
- Desk and chair
Your home may not have the same protections as your business for handling sensitive data. From either a hack or a virus, you face a potential loss of data that could harm your business.
When conducting business from your home, it is important to understand your insurance coverage in the event of data loss and if there are any exclusions. You’ll also want to think about how the loss of data can harm your overall business operations or may lead to loss of revenue.
Filling in the Gaps With Additional Insurance Coverage
Whether you work for a company, are an independent contractor, or self-employed, don’t leave yourself exposed if you are now working from home. You face potentially huge losses if you need to file a claim, only to find that the situation is not covered. Talk with your insurance agent and make sure you have the right coverage for your work situation.
Homeowners Insurance Coverage
The use of your home has changed if you are now working from home. As an employee of a company, it could be that 20% of your home’s use is now dedicated to work.
You can add coverages to your homeowner’s insurance to better protect yourself as an employee of a company.
An incidental office occupancy endorsement provides liability and coverage for personal equipment used in business. It can also expand off-premise coverage.
You can also add an office occupancy endorsement to your homeowner’s coverage. An insurance agent can talk you through the level of risk and make specific recommendations for additional protection.
If you have the risk of claims from third parties from customers or deliveries, you can add a homeowners’ liability endorsement for your business. Typically, this is only available if you have relatively few business-related visitors.
In-Home Business Coverage
An in-home business policy goes beyond what you can add to a homeowners policy. This type of insurance sits between homeowners and commercial policies. For example, you can cover business property and also have general liability insurance.
This home-based business coverage for business owners can contain optional coverages, like protecting your business income, valuable papers, and accounts receivable.
Business Owners Policy
A business owners policy is a step up from an in-home business policy and is designed specifically for small businesses. You can cover your commercial property, business income, and general liability.
Shifting to operating out of your home may require you to think about your business owners policy in a way that you didn’t before. Your circumstances may have also changed dramatically as a result of leaving the office.
For example, you may want to consider:
- Business property that you have stored elsewhere, such as still in an office while you are at home
- Business interruption if you face a loss of revenue due to temporarily reducing business operations
- Workplace injuries that may occur for any of your employees working from home
- Potential lawsuits that could occur against your business, either in your home or your employees
- Coverage for your office and business equipment, regardless of location
A proper business policy can cover you as a small business and be tailored to your business operations, whether at home or in the office.
Other Insurance to Consider
While you may have has supplemental insurance policies previously, now is a good time to review those policies. Work from home may have changed how these policies apply, especially if you are operating your business from home.
Commercial Auto Insurance
Working from home may have changed the way that you use your vehicle for business purposes. You may have relied on public transportation previously and are now using your vehicle to travel to remote client sites.
You should not rely on your personal auto policy to cover your business use of your vehicle. A business auto policy would cover commercial auto liability and physical damages.
If you provide services to clients, such as advice or recommendations, you may need professional liability insurance. This covers financial losses that a client may face based on the advice you provide.
With Covid-19, your advice to clients may have changed substantially. If you did not have professional liability insurance previously, you might want to consider adding it to your business policy.
Frequently Asked Questions About Remote Work and Insurance
1) Are remote employees required to have a designated workspace?
This would be ideal but hard to enforce. If you are self-employed, you can make your employees aware that workers’ compensation insurance may cover work-related injuries in the designated workspace.
2) Should you get insurance if you expect remote work to be temporary?
Yes. No matter your situation, you don’t want to be caught in a situation where you need to file a claim and find out you are not covered. With Covid-19, no one knows exactly when (or if) office work will resume in the same way.
3) Do I need to let my insurance company know if I am working from home for an employer?
It is advised that you let your homeowners insurance company know. You can then clarify what your policy covers.
4) Will my homeowners insurance cover damage to equipment if it is mixed-use?
It depends. If you are using your personal equipment for business use, your homeowners insurance may not provide enough coverage.
5) How can I minimize losses from cyberattacks when working from home?
While the loss to your business may be enormous, you can protect yourself as an independent contractor or small business through cyber liability insurance. This includes both damage to your own systems as well as damage from a third party.
Ensure You Are Covered: Talk to an Insurance Agent
What COVID-19 made many businesses realize is that work does not have to take place in an office. There are many indications that remote working is here to stay.
You want to make sure that you are protected if your home office is now your permanent office, whether you work from home full-time or part-time. Don’t assume that your current homeowners policy will cover you from all risks and exposures.
Your insurance agent can talk you through your current coverage and what you may need for your situation.