Home-based work is becoming more commonplace, whether it’s full-time or the hybrid model. However, when you are transitioning to work from home you might not have considered how it might impact your insurance coverage for your home.
If you’re among the many who work at home, here’s what this means to your protection.
Does Home Insurance Cover Working from at home?
Basic homeowner’s insurance does not provide coverage for businesses operating out of homes. The most commonly used homeowner’s policy called the “HO-3” or Special Form only covers protection for equipment used by businesses of $2,500 for equipment that is located in your home and $500 to items outside your home like when you bring your laptop to the cafe. 1 Your insurance for business property may be extended to equipment located in garages that are detached or in a separate structure. However, the detached structure isn’t covered when you run your business from there. 2
Perhaps even more troubling for those who work from home is that homeowner’s insurance policies generally include liability exemptions in the event of bodily injury or property damage that results from the business activities. A possible exception is when you’re younger than 21 years old and are working for yourself in a part-time position without staff. 2
Additionally, the fact that you should note that your homeowner’s insurance will not cover physical injury or property damage caused by providing or not providing professional services in your home such as when a courier slips and falls onto your driveway ice-cold as they deliver a work-related item. The services typically are classified by the courts as needing special knowledge or skills and not manual abilities as per the International Risk Management Institute.
Home Insurance Coverage for Independent Contractors
When you’re self-employed and work from your home–whether full time full-time, full-time or only on occasion, you’re deemed to be operating a business at home. This means that you’ll require the right insurance.
The majority of homeowner policies do not include any of the exceptions that are required to be being a business. However, there’s a chance that your HO-3 policy could have an exception that is limited with certain restrictions, for example, the maximum amount of compensation. It is recommended to review your homeowners insurance agreement carefully to examine the policy’s clauses and terms. If you’re unsure if you’re covered by insurance, speak to your insurance company to discuss your rights even if you work at your home. 2
Home Insurance Coverage for Full-Time Employees
Imagine you’re a full-time employee who works at home. In this scenario, it’s likely that the responsibility of your employer to utilize their insurance policy for business liability to cover injuries, accidents or other accidents that may occur within your premises. 4 And If you are injured while working, however, you’re still entitled workers’ insurance benefits. Your employer might be held accountable in the event that a person who visits your property is injured or their property is damaged.
What happens if the company equipment you brought home, for instance, the laptop from your company, gets destroyed or taken? Typically, your employer will be accountable for the cost through their business insurance.
Although your employer’s business insurance will protect you from liability, however, it’s essential to inquire that you’re covered by HR. available to you when working at your home. It’s an excellent idea to call the insurance company that covers your home to verify that you don’t require additional coverage or that you’re not in violation of any provision of your policy agreement.
How To Add Coverage for Working From Home
If you’re in need of additional insurance for commercial claims for business-related claims, insurance companies like the Insurance Services Offices (ISO)–an organization that creates standard insurance forms developed endorsements that you might be able to include in your insurance policy:
- Higher limits for business property endorsement The expansion of the on-premises business property liability limits to to $10,000.
- Business endorsement of business offers insurance against liability for jobs classified as instructional, clerical or sales. However, this endorsement isn’t applicable for those who are a sole owner or even an employee.
- Business insurance for home coverage provides business property and income from business and medical payment, personal liability and extra expense protection for businesses that are home-based that are classified as office, service, sales, or arts and crafts. The business must also meet certain criteria like the maximum annual income and a limit on the amount of workers.
Another option is to get a business endorsement for home-based businesses from the American Association of Insurance Services (AAIS) an additional organization that designs standard policies. It is similar in structure to ISO’s home-based business insurance coverage endorsement, but it includes three additional business categories including food, retail, and breakfast and bed. 5
Home-based businesses that don’t qualify to receive any of the above endorsements may be able to acquire a business owners insurance policy (BOP). The BOP policy is created to provide small-sized businesses with property and general liability insurance. 5
Does Renters Insurance Cover Working From Home?
Renters insurance is like homeowners insurance in its coverage however it does not provide the protection of your home or structure. Since it’s intended to safeguard your personal possessions and activities and activities, it’s unlikely to protect any claims related to business. For instance, if make use of your computer for running your own business as a freelancer and it’s stolen and your insurance company considers it a business asset and may won’t fully cover the cost to replace it. 6 If you are working from home and you have renter’s insurance, take a look at the fine print and verify the information with your insurance company.