COVID-19 has meant that more people than ever are working from home. According to a recent Stanford Institute for Economic Policy Research (SIEPR) study, approximately 42% of the US workforce is now working from home.
For many businesses, this unplanned work-from-home experiment has proven shockingly successful. Companies like Facebook, Twitter, and Shopify have announced that employees may continue working from home permanently. Even more companies have announced “indefinite” policies. Post-COVID, SIEPR estimates that hours spent working from home will permanently achieve a four-fold increase.
All this to say, for many US workers, working from home is here to stay. So it’s time to stop thinking about it as a temporary fix, and start understanding the bigger picture of what it means for you. Making sure you have the right insurance coverage for working from home is an important part of that picture.
Does homeowners insurance cover working from home?
Yes… and no. That’s why it’s crucial that you take the time to understand what homeowners insurance does and doesn’t cover.
Working from home changes the insurance game in measurable ways. When you work from home, you have increased liability risk in several areas. Workers’ compensation risk also increases. On top of that, your insurance carrier may have the right to deny coverage for homeowners insurance claims resulting from business activities conducted in your home.
I’m working from home for an employer. What do I need to know?
If you’re simply telecommuting, working from home for a business you don’t yourself own, you should consider the insurance liability issues that could arise from:
Theft or damage of business property. Your employer-provided computer, printer, or other property could be stolen or damaged while you’re working from home. You could be liable.
Cybercrime. It may seem harmless to do a little online shopping on that work computer. But you could be risking cyberattacks, whether from accessing “not secure” websites, falling for phishing in your personal email, or getting a virus from installing external programs or add-ons. This could put your employer’s data and intellectual property at risk. You could be liable.
Injury. If you were injured in your office in the course of doing your work, your employer could be liable for workers’ compensation. If you were injured at home in the course of doing your work, your employer could still be liable, depending on the cause and nature of your injury.
So how can you protect yourself and your employer from potential work-from-home insurance issues?
Talk to HR. Ask what is and isn’t covered. Document the conversation.
Don’t use your work computer for personal business. After all, it’s primarily that “personal business” that creates potential liability for you. Anything that happens online during the course of your work should be covered by your employer.
Establish an appropriate workspace. That means good lighting and ventilation, an ergonomic chair, well-positioned work surface, and work area free from risks or hazards (e.g., maybe don’t store your computer by that leaky window or ceiling). Use a surge protector to protect electronics. Access only secured internet networks. Ensure that you have appropriate safety and security equipment (e.g., smoke/carbon monoxide detectors, fire extinguishers, door locks). Properly and securely store any business documents. Limit others’ access to your workspace.
Keep your homeowners insurance policy up to date. Obvs, you aren’t protected if your policy isn’t active.
Talk to your insurance agent or advisor to ensure you understand what is and isn’t covered. The personal liability coverage of your homeowners insurance policy may provide protection in the event your employer’s business property is damaged or stolen. It may also provide bodily injury coverage. But there are limits.
I’m running my own business out of my home. What do I need to know?
If you’re working from home for your own home-based businesses, your insurance issues are more complex. Your coverage needs will vary based on the nature of your business. That’s why it’s crucial for you to talk to your insurance agent or advisor to ensure you have coverage that fits your needs.
It’s possible you may not need coverage beyond your homeowners insurance. But that’s only likely if your risk profile is very, very low. For example, clients don’t come to your home, you don’t have employees, your only business equipment is a laptop, your work doesn’t expose you to much liability, you have a well-established home office, high-quality internet, and the right security protections in place, AND your client contracts don’t require you to maintain certain coverage levels. (WHEW.)
It’s more likely, however, that your home-based business does increase your liability. What if a client sues you for poor workmanship? Compromising their company information? Defamation of character? Since it occurred in the course of business activities, your homeowners insurance coverage won’t cover any of that. Similarly, personal umbrella liability coverage excludes business-related liabilities.
All this to say: Whatever the scope of your home-based business, talk to your insurance agent or advisor about your business insurance needs. Give them thorough, honest answers to all their questions so they can guide you to the right coverage. Recommended insurance coverage may include general liability, commercial property, workers’ compensation, business interruption, cyber insurance, or other coverage types. Alternatively, you may be able to suffice with a home business endorsement on your homeowners insurance policy. But you won’t know if you don’t ask.
Find out whether your homeowners insurance policy gives you the coverage you need for working from home. Give us a call at (833) 487-2683 or send us a message. One of our expert insurance advisors will be happy to do a free, no-obligation policy review!