Does Home Insurance Cover Working From Home? Understanding What Is & Isn’t Covered

Did You Know?  The Bureau of Labor Statistics estimated that 29% of the labor force was capable of working from home back in 2018. Now in 2020, in light of the coronavirus pandemic, these statistics have substantially increased.

Companies across the country have been moving to remote working, in an effort to keep their staff and consumers safe. If you are one of the millions of employees suddenly calling your kitchen table your workspace, this article answers some of the questions you may have, which go well beyond your ability to balance your newfound home/work life.

Let’s address one major issue people are concerned about. There have been a lot of questions about whether working from home affects homeowners insurance. The simple answer is, “YES,” it most likely does affect your policy. However, it really depends on the kind of employee (or contractor) you are and what your exact situation is.

Here’s what you should know…

Work-From-Home Insurance Coverage

Home insurance is obviously not business insurance. It protects your personal property, activities and belongings. If something is deemed “for business use,” there are strict limits to how home insurance handles that loss.

Let’s say, for example, your policy offers some protection for business property, like a laptop computer. You might be covered for what you think could be up to $2,500 for damaged or lost business property, which happens in your home. But, what if damage or loss happens when you’re away from home? That policy may cap the payout to be only $250, which is substantially less!

This limited home insurance coverage may apply to both the personal laptop you use for work, or the laptop you use to run your business at home, which is not unusual for home insurance policies. Your risks as a homeowner (renter) are very different from your risks as a business owner or employee, as many home-based independent contractors or gig workers will tell you.

Coverage for Employees vs. Independent Contractors

In the eyes of the law independent contractors are considered to be business owners. That means they are responsible for paying everything out-of-pocket in order to cover their at-home business. That means paying for their own liabilities, taxes, insurance equipment, inventory, and more.

A home insurance policy, as you can see, is not enough to cover these obligations. You would need business insurance to address your work liabilities, (example: A client visits your home and has an injury while there) and to cover business property (exceeding approx. $2,500 in value).

For full-time remote employees, they are entitled to have their employer provide the tools and equipment needed to get the job done. According to surveys, even under normal circumstances, approx. 70% of professionals work from home at least once a week, and nearly 55% telecommute for at least half the week. Some remote-working employer obligations include:

• Covering business-owned equipment with commercial property insurance.
• Providing liability coverage for the employee’s work.
• Paying half their remote employee’s employment taxes.

The question is who covers that stolen personal laptop an employee uses for work, while working at home?

If it’s a company-bought laptop, the employer will typically cover its replacement. But, a personal laptop stolen from your home that you use for work could be covered by your homeowners (home renters) policy. This is certainly a topic for employees, employers and insurance agents to discuss.

If your full-time work-from-home employment requires you to occasionally meet with clients in your home, be aware that home insurance will not cover business-related visitor injuries. Your company’s general liability insurance should cover that, but be sure to discuss that with your employer.

Home Insurance Gaps

It’s important find out what coverage extends to you while you are performing company tasks from your home. Full-time work-from-home employees will usually have coverage for:

• Workers’ compensation for injuries that happen to you while working (not during non-work hours or non-work tasks).
• Limited coverage for personal property while performing work-related tasks.
• Any business property provided to you while working at home.
• Liability coverage for business-guest injuries on your property.

As a remote full-time employee, your benefits (including insurance) are extended to you while working from home, just as they would be if a company sends someone to a conference and there is an issue with theft or injury while traveling.

Independent contractors, on the other hand, generally get paid 10-20% more because they cover all of their own business costs (insurance, taxes, etc.).

If you’re a full-time employee concerned about any of these things while working from home, talk to your supervisor for clarity.

A proper business insurance policy will typically cover:

• Your business property both on and off your home premises.
• Business liability for injuries on or off your property, or issues with your work.
• Business interruption insurance to cover lost revenue, when a covered loss forces you to temporarily reduce business operations.

Let United Agencies help clarify what is and isn’t covered during these unusual times. Click the button below for assistance. We are always happy to help.