Summary
Whether you are a longtime work-from-home employee, or someone who has been afforded the option to work a few days from home by your employer, your status may affect your insurance coverage.
- Insurance coverage will differ based on whether you work remotely for a company or if you are working from home as someone who is self-employed
- Workers’ compensation rules vary from state to state, and might cover your home-based workplace
- Your homeowners insurance and auto insurance coverage likely have restrictions that exclude business use of your home or vehicle
Are you one of the millions of Americans who are now working primarily from home?
If so, it’s important that you understand what your homeowners insurance will cover while you’re on the job — and what it won’t.
The COVID-19 pandemic transformed the way we work and go about our daily lives. In March of 2020, millions of employees were sent home by the companies they worked for and encouraged to quickly pivot to working from home.
Far from productivity suffering, employers found that it actually increased. Multiple studies conducted since the start of the pandemic have shown that workers were more productive working from home. While there is considerable speculation as to what might be driving this increase in productivity, a savings in commute time appears to be a considerable factor.
Many employees appreciate the shift to remote work, too. Subsequent surveys of employees reveal that a significant percentage of them indicate that they would quit their jobs rather than be forced back into an office.
Since employees prefer working from home and productivity has not suffered, some companies are continuing to allow their workers to operate remotely — especially as the pandemic continues. Other companies are considering a hybrid approach that allows for some remote work while also requiring some in-office presence.
Working from home has many advantages, but you should know that it also might have an impact on your property insurance.
The most meaningful factor for your insurance coverage is whether you work remotely for a company — or if you are self-employed. Both are work situations that would limit the amount of coverage provided by your homeowners insurance coverage or renters insurance coverage, but the insurance solutions for each situation are different. Let’s explore the options.
Working Remotely for an Employer
In many cases, employers provide the laptops, monitors and other equipment necessary to do your job from a home office. If your employer provided the electronic equipment you are using to do your job remotely, it’s very likely that the company’s insurance covers that equipment. Things get a bit trickier if you are using your personal computer to do company work.
Generally speaking, the property in your home covered by your homeowners insurance policy is described as being for personal use. If lightning strikes your house and your personal computer is damaged or destroyed, it would typically be covered under your standard homeowners insurance policy. If you own a high-end computer such as a gaming computer, you might have purchased additional coverage such as a valuable personal property rider.
If you’re using your personal equipment for work, however, there might be a much lower coverage limit — or it might not be covered at all. Using your personal electronic equipment for work carries risk for your employer as well. Connecting to a company intranet from a computer used by the family could introduce malware and viruses into the corporate system. Be sure to check with your employer to make sure you’re up to date on their security requirements for remote employees.
Clients and Vendors
Your homeowners insurance policy offers liability coverage that protects you financially if someone hurts themselves on your property, while a renters insurance policy protects you if someone hurts themselves in your apartment.
But if the person who slips and falls is a work client or vendor, your homeowners or renters insurance might not cover the resulting injury.
If you are a remote employee and your job includes visits to your home by either work clients or work-related vendors, it is very important for you to talk to your employer about how their insurer handles liability insurance coverage for remote work. This is because your employer may have a provision that stipulates that you will maintain your work-from-home office and keep it in a condition that prevents injuries.
If a client visiting your home stumbles over a child’s toy and sprains an ankle, who covers the injury? Your homeowners insurance will likely point to the work-related nature of the visit, and your employer’s insurance will point to the provision that stipulates that, as a provision of working from home, you will maintain a safe work environment.
It’s important to note that you may be required to maintain a safe place to work even if you do not have clients and vendors visiting your home. That’s because workers’ compensation rules — and what employers are required to do to keep their workers safe — can vary dramatically from one state to the next.
Using Your Personal Vehicle for Work
Similar concerns arise if you are using your personal vehicle for employment purposes. Your vehicle’s insurance policy specifically states that you are covered for personal use of the vehicle.
If you are driving your personal car to make work deliveries and get into an accident, however, it is your employer’s insurance that covers the damage. Be sure you are aware of your employer’s requirements before agreeing to use your vehicle on the job.
Working From Home as a Sole Proprietor
The gig economy has led to a remarkable growth in self-employment across a wide range of jobs and industries. A Gallup study conducted prior to the pandemic showed that almost 30 percent of Americans are self-employed. This includes those who are fully self-employed and those who work for themselves as a “side hustle.”
All of the same factors mentioned above are still in play if you work for yourself. Your computer equipment still will not be covered by your homeowners insurance if it’s damaged. Your homeowners insurance liability will also be unlikely to cover client or vendor injuries. Your car insurance will still specifically exclude most business uses of your vehicle.
With no employer’s insurance to fall back on, how do you protect yourself financially if you work from home and are self-employed? You will need a separate insurance policy for small businesses to cover these types of situations. A small-business-insurance policy will cover computer equipment and other office materials, and it will typically offer liability coverage if vendors or clients visit you at your home.
Many policies also carry coverage for cybersecurity incidents or data breaches — and if you are providing advice or consultations, they can cover professional liability insurance and disability coverage for employees who work from home.
The Bottom Line
Remote work appears to be here to stay, so it’s important to brush up on how your insurance coverage will be impacted.
If you are working from home remotely for an employer, take the time to ask questions and understand how the company’s insurance works and what might be expected of you — such as maintaining a safe work-from-home environment.
What you learn might surprise you, especially if there are safety rules that your employer or HR department wants you to follow while you are working from home. If you ignore safety requirements and are injured while working at home, your employer’s insurance might not be liable.
Working remotely has many benefits for both workers and employers, but it also can affect what is covered by your insurance. It’s up to you to learn what is and is not covered by your employer’s insurance.
If you are self-employed, it’s important to understand that just because you are not covered by an employer, it doesn’t mean that your homeowners insurance policy automatically kicks in if something happens. This is true whether your self-employed job is doing people’s taxes or baking cakes.
Regardless of the reason why you work from home, make sure that you know what insurance you need — and make sure that you are protected.
