An unprecedented number of people have transitioned from operating in an office environment to working remotely from home. This change seems to have more benefits than downsides, specifically when analyzing social distancing, public safety, and flexibility for work-life balance, and for that, we created the Working Remotely: 101 on Home Insurance.
These changes have led to some Homeowners questioning whether this would affect their policies. Are they in jeopardy, or do they require extra coverage, and would that mean higher rates? It’s essential to receive accurate information on these situations to avoid any coverage issues in the event of a claim.
Does Home Insurance Change When You Are Working remotely?
When a room in your home doubles as an office, is your home insurance policy enough to protect your work items and house effectively?
Historically, most companies would not insure a homeowner who runs a business from their living space unless a home-based business rider or commercial policy is in place as well. It’s worth noting that remote work does not constitute self-employment status or fall under a home-based business. Both situations should be clearly defined in your homeowner’s policy, or you should obtain clarification from your insurance company.
Finding a solid answer in this situation requires examining both cases individually. First, let’s explore the 101 guidelines regarding home insurance when working remotely and in a home-based business or self-employed status.
Home Insurance and Remote Workers
Remote workers fulfilling their duties from home are not considered self-employed, assuming they work for and get paid by an agency or company. At the onset of the pandemic, insurance companies were willing to overlook these arrangements made between companies and their employees. These protocols were implemented involuntarily due to the lockdowns in extreme, unprecedented circumstances and as a result, homeowners had not been required to buy extra coverage.
As the world and workplaces open back up, the work-from-home model is here to stay. As a result, most insurance companies have expanded what they consider acceptable under the general policy guidelines for the long term.
An employee of a company that facilitates work from home is now an acceptable norm, typically at no extra cost.
Important to note is most insurance policies automatically include professional use tools and equipment for a specified limit, often around $5000. Suppose you have outfitted your home office with equipment such as a scanner, copier, computer and accessories or other tools specific to your job. In that case, you will want to be aware of the policy limit and address any shortfalls if necessary. This coverage also only extends to the items on premise.
At the same time, you will want to address with your agent if you need to go offsite with any of these items. Additional coverage may be available for an additional premium. If your employer has provided these items, you will want to ensure that they have extended coverage to them or that your policy will extend to these items while in your care, custody, and control.
However, suppose your job requires that customers attend your home, or that you hold stock or product at your home, or the scope of your duties adds an exposure not usual to sitting at a desk working in your home office. These circumstances fall outside the lines of the simple “I work from home” guidelines. Therefore, they will require special consideration from your insurance provider.
101 on Home Insurance and the Self-Employed Business Owner
For homeowners who decide to become business owners and subsequently run a business from their home, changes to the policy are required to satisfy a higher liability scope, as well as the need to consider included coverage amount for business use tools and equipment, and if the type of business contents qualifies for any of the automatic coverage extension at all.
Qualification for home-based business coverage is specific to the type of business, the amount of coverage required, and the receipts or gross sales of the company. Home-based business coverage can be pretty reasonable and can include a wide range of small business types. For example, a sales rep for an organization like Tupperware.
As well as seamstress, interior designers, photographers, tutors, music teachers, electronic repairs, accounting, adjusters and artisans (who create items like soap or leather goods to sell and more…)
Some home-based businesses need a separate commercial policy because the scope and scale are too great with respect to potential claim exposures, revenue, and increased traffic flow of customers to the home.
Businesses such as counselling services, lawyers, estheticians, personal trainers, and daycares typically require a commercial policy before a home insurer agrees to cover the home.
Conversely, suppose you are running the business from your home from an administration perspective but perform your work outside of the house like a self-employed tradesperson or landscaper. In that case, your insurance company will probably require a commercial policy.
What to Consider if you are Working Remotely
Whether you are working remotely for a company or your own home-based business; the 101 on insurance factors to consider are:
- Will you have clients enter your home to conduct business, creating liability exposure?
- Does the scope of your work add risk and additional exposures to your home?
- Do you have adequate coverage for your business contents and goods?
- Suppose you are solely working remotely for a company. Do you have equipment from your employer, and who is covering it?
- Have you spoken to your insurance agent to be sure all you do falls within the acceptable guidelines of your insurance provider?
Regardless of what type of work you do, always contact your insurance agent, so they can address specific information to your policy and other concerns.
In addition, It’s never a bad idea to review your coverage, ensuring that how you are operating is within the rules and limits of your specific policy.