Technological changes are making it easier than ever to work from home. And the arrival of the pandemic has only hastened this process. If you are working from home, however, it might have serious implications for your home insurance policy. Let us examine the issue in more detail.
Doing Your Full-Time Job From Home
If you work from home full-time it will in most cases be your employer’s responsibility to make sure that their business liability insurance covers any injuries, accidents, or other mishaps that could happen. If you are injured while doing work for them, you will have the right to claim worker’s compensation benefits. Your employer will also be responsible if, while visiting the premises where you work, a client gets injured or suffers damage to his or her property.
It’s imperative though that you confirm with your employer that the company’s insurance will cover all these eventualities. Also, call your personal home insurance provider to make sure you won’t be violating the policy and that there is no need for additional coverage.
Independent Contractors And Home Insurance
If you work from home as an independent contractor the insurance company will view this as running a business from home - and you will most likely have to get appropriate insurance cover. Some HQ-3 policies have a few exceptions, e.g., if you earn less than a certain amount. Contact your insurance agent if you have studied the policy and you’re still unsure whether you are covered or not.
Running a Business From a Residential Property
The typical homeowners insurance policy wasn’t designed for people who are running a business from home. A standard HQ-3 policy will only cover business equipment to a maximum of $2,500 while that equipment is inside your home or (sometimes) also if it’s in a detached structure such as a garage. In the case of equipment that’s used off-premises - for example, if you use your laptop in a restaurant, this amount drops to $500.
Even more worrying for those readers who are working from home is that homeowners policies often come with liability exclusions, both for property damage and bodily harm that might arise from these activities. The single exception is typically where the policy owner is younger than 21 and working for him- or herself on a part-time basis, without employing anyone.
Despite all its other benefits, a standard home insurance policy will in most cases not cover any damage to property or bodily harm that can be traced back to professional services you provide (or fail to provide) from home. An example would be if a delivery guy slips in your driveway and breaks his leg. Courts normally define these types of services as those that require specific mental skills or specialist knowledge.
Failing to inform your insurance provider about the fact that you are running a business from home could result in them rejecting a business-related claim unless it is specifically covered by your home insurance policy. In these cases, the courts often side with the insurance company, and you might be left to pay for liabilities and damages yourself.
Working From Home And Renters Insurance
Homeowners insurance and renters insurance are quite similar in scope. The exception is that the latter does not provide cover for the home itself or any structures there might be. Since its primary aim is to provide coverage for your personal activities and belongings, it will in most cases not cover claims related to running a business. If you, for example, run a freelance business from a rental property and somebody steals your computer, the insurance firm might regard it as business property and refuse to cover the cost of replacing it.