Do You Need Insurance Coverage Working from Home?

The Coronavirus pandemic has led to a complete overhaul of the typical office environment. Prior to the outbreak and shutdown of many businesses, most employees commuted to a physical location to complete their daily tasks. Now, workers are performing these same duties from the comfort of home, perhaps with equipment loaned by the company.

Businesses have seen many benefits of their employees working from home, including fewer distractions and more flexibility. When employees eliminate the commute to and from work, they also decrease their carbon footprint and put less strain on their cars.

Yet, insurance is one gray area that offsets the benefits. Particularly, whose policy covers equipment damage, theft or breakdown. If you’re new to working from home, think about the following factors.  

Who Do You Work For – And Who Owns Your Supplies?

Unfortunately, the convenience of working from home can get complicated. As your first step, determine who employees you. If you’re an independent contractor or a business owner, you work for yourself. If you’re a full-time worker hired directly by a business and not a contractor, you report to them. Unsure about the difference? You work for an employer if:

• They pay half of all employment taxes.
• They have liability coverage for the work and conduct of employees.
• You have been supplied with company-owned equipment.

Insurance plays a significant role, especially in these last two scenarios. Your employer has likely taken out general liability, professional liability, commercial property and workers’ compensation to anticipate potential risks related to employee behavior and output, on or off the physical premises. As such, because your employer is expected to carry this degree of insurance coverage, you do not need to take out your own commercial policies.

Specifically, your employer’s insurance coverage extends to:

• Business equipment and property in your home, such as a laptop and printer.
• Workers’ compensation for on-the-job injuries. As a note, not all injuries that occur in your home during work hours will be covered by your employer’s policy – they must be sustained through work-related tasks.
• Clients who visit your property for business purposes.

What if you’re a contractor? In these cases, not only are you paying all employment taxes, but your clients’ insurance policies likely do not extend coverage to you or your work. As such, you’ll be expected to take out business coverage: Home-based business coverage may be sufficient to anticipate risks and cover your supplies, or a Business Owner’s Policy may be more appropriate.  

What About Homeowner’s Insurance?

In general, homeowner’s insurance will not cover business conducted on your property, including if a client is injured on your grounds. That’s why home-based business owners and independent contractors need general liability.

While homeowner’s insurance does not extend to business conducted on your property, it provides a small amount of coverage for equipment. Coverage is limited, extending to $2,500 for lost or stolen property.

If you have a home office, are self-employed or work directly for an employer, this amount helps address the loss. Yet considering the cost of computers, furniture and other equipment, it often is not enough. You may need to consider purchasing commercial property insurance or a home-based business rider to anticipate this expense.

Risks Involved with Working from Home

If you’re working from home, think about the following in terms of insurance coverage or discuss with your employer to ensure their policies are sufficient:

• Storing and selling inventory from your home.
• Damaged or stolen equipment that is not easy to replace.
• Customers or clients visiting your home for business purposes, and who will cover injuries.
• What to do if a fire or weather-related event damages your home or office space.
• Workers’ compensation, should you be injured in your home while doing business.
• Cybersecurity and data breaches, including how your employer’s plan to anticipate attacks and protect company data with devices being used at home.  

The COVID-19 pandemic has exposed new business risks and changed how many employees work for a company. To revisit your commercial insurance coverage and make any necessary updates, contact us today.