Does Home Insurance Cover Working from Home?
Mon Apr 13 2020
The Bureau of Labor Statistics estimated 29 percent of the labor force was capable of working from home in 2018. In light of the coronavirus pandemic, we’re putting that estimate to the test.
Companies across the country have moved to remote operations to keep their staff and consumers safe and to comply with social distancing orders.
If you are one of the millions of employees suddenly calling your kitchen table your workspace, you may have some questions that go well beyond your ability to balance your newfound home-work life.
Let’s answer one in particular. We’ve been getting a lot of questions about whether working from home affects homeowners insurance. The simple answer is that it can – it really depends on the kind of employee you are.
Here’s what you should know.
Working from Home and Insurance
Homeowners insurance isn’t business insurance. It protects your personal property and personal activities. If something is deemed “for business use,” there are strict limits to how homeowners insurance handles that loss.
For example, our policies offer some protection for business property (like a laptop) but there are limits. You’re covered for up to $2,500 for damaged or lost business property that happens in your home. If damage or loss happens away from home, though? Our policies cap that payout at $250.
This limited home insurance coverage may apply to both the personal laptop you use for work or the laptop you use to run your home-based business.
That’s not unusual for home insurance policies. Your risks as a homeowner are very different from your risks as a business owner or employee, as many home-based independent contractors or gig workers will tell you.
Insurance Needs for Independent Contractors vs. Full-Time Employees
Independent contractors are business owners in the eyes of the law. That means they are responsible for paying their own taxes, covering their own liabilities, and buying their own insurance to protect their at-home office, equipment, and inventory. As we mentioned above, a home insurance policy alone is not enough to cover these obligations. You’ll need business insurance to address your work liabilities (e.g., if a client visits your home and has an injury) and cover business property (if it exceeds $2,500 in value or ever leaves your home).
By contrast, full-time remote employees are entitled to have their employer provide the right tools and equipment to get the job done. (Even under normal circumstances, nearly 70 percent of professionals work remotely at least once a week and 53 percent telecommute for at least half the week.) Some working from home employer obligations include:
- Paying half their remote employee’s employment taxes.
- Providing liability coverage for the employee’s work.
- Covering business-owned equipment with commercial property insurance.
The question is: who covers the stolen personal laptop the employee uses for work purposes while at home? If it’s a company-bought laptop, your 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 policy. If possible, it’s worth asking your employer to cover its replacement anyway to spare you from filing a claim and risking a rate increase.
If your full-time remote employment requires you to occasionally meet with clients in your home, be aware that homeowners insurance will not cover business-related visitor injuries. Your company’s general liability insurance should cover that.
How to Fill Work from Home Insurance Gaps
If you’re a full-time employee concerned about liability and personal property while working from home, talk to your supervisor. 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:
- Any business property provided to you while working at home.
- Limited coverage for personal property while performing work-related tasks.
- Workers’ compensation for injuries that happen to you while working (not during non-work hours or non-work tasks).
- 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 percent to 20 percent more because they cover all of their own business costs (insurance, taxes, etc.). A proper business insurance policy will typically cover:
- Your business property 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 half business operations.
While we don’t offer business insurance, it is important to us to help clarify what is and isn’t covered during these unusual times. We’re here to help if you have other questions!
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