Working from Home & Your Insurance Coverage

If today's modern workplace gives you the flexibility to work from home, you may have the luxury of conducting business in sweats, making you the envy of peers who are stressed out by rush-hour traffic and finding the perfect Casual Friday ensemble. But there are considerations you should review before you get too comfortable. Whether you have a part-time or full-time job, run a business from home or simply telecommute a few days a week, there are insurance-related questions to contemplate. If you are depending on your renters or homeowners policy to protect your business or business related liability incidents, you might be surprised to learn there are limitations to what a renters or homeowners policy will cover.

Operating a Home-Based Business

Running a business from your home means you have different concerns than the employee who simply telecommutes. Here are a few questions to contemplate:

  • Do you keep business related stock or inventory in your home?
  • Do you have specialized or difficult-to-replace equipment that requires special consideration? Many renters or homeowners policies limit office equipment replacement to $2,500. Would this cover the equipment you need to keep your business running?
  • Do clients or customers visit your home office? If so, are you protected against possible lawsuits if a visitor were to injure themselves?
  • If your home office were destroyed by a flood or fire, how would you be compensated for the downtime?

These are just a few of the questions you should discuss with your provider. Coverage for business-related property losses or liability exposures is typically excluded from a traditional homeowners policy. You may need to consider a business-related endorsement or a more comprehensive in-home business policy or business owners policy in order to be fully protected.

Telecommuting

Working from home is a benefit many employers have embraced as they compete to attract and retain quality employees and provide a satisfying work-life balance. But telecommuting is not always as simple as having a cell phone, a laptop and high-speed Internet. Concerns about cyberattacks add an additional layer of liability for the work-from-home professional. Verify that your company will install the necessary software on your home computer to protect the company's data, and be mindful of your own responsibility with regard to protecting company information. Telecommuters face similar risk factors as employees in the office with regard to work-related injuries and safety issues. You may want to verify that your employer's workers' compensation coverage will cross over to your home office.

Have a Conversation

Contact your insurance agent or company, ask questions, and check your coverage to see if there are gaps. A failure to disclose to your insurance company that you are running a substantial business out of your home may result in being denied a business-related claim or a failure to renew your policy. Some professionals require professional liability insurance or errors & omissions (E&O) insurance. Don't let your hard work be lost to an accident or oversight. Have a conversation and make sure you are properly insured.

More Information

For more information, check out Insure U's Home-Based Business page, Insure U's Job Change resources or contact your state insurance department.

January 2018

About the NAIC

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit www.naic.org.

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