Do you need additional insurance coverage when working from home?
The coronavirus continues to disrupt our daily lives and with a stay-at-home order issued across the province, working from home has become the new norm. The economic slowdown has resulted in mass layoffs across various business sectors, but also led to a rise in working from home and home-based businesses.
One way or another, COVID-19 has us managing our professional lives from home. During the course of this pandemic, a lot of our customers have the same question: does my home insurance policy cover working from home and home-based businesses? To answer this, let’s look at what your basic home insurance policy covers.
What does home insurance cover?
A basic home insurance policy protects:
- The interior and exterior of your house and detached structures on your property (such as a storage shed) against insured risks like fire, wind, hail, theft and more.
- Your belongings — damage or loss to furniture, clothing and other personal property inside your home or vehicle.
- Additional living expenses like a hotel room, storage fees and more if you can’t live in your home while repairs are being made after an insured loss.
- Liability claims — if you accidentally cause property damage or bodily injury to others. You’re covered at home or anywhere in the world.
But what if you’re working from home or running a home-based business? How does home insurance coverage change?
Working from home
If you’re working from home temporarily, your employer will probably provide you with the basic equipment needed to do your job, such as a company laptop, desktop monitor, and even furniture in some cases.
Generally speaking, company-owned equipment is covered under your employer’s commercial insurance policy. In this case, you don’t need to add extra coverage for business equipment to your existing home insurance policy.
When a policyholder usually works in another location and is temporarily working from home, it is not considered business use. Nothing needs to be amended on the home policy and there is no additional premium charged.
On the other hand, an employee may have to use personal equipment, to work from home. Most home insurance policies have an additional coverage cap for business property, which can vary between $2,000 to $5,000, depending on the insurance provider. This additional coverage should be enough to protect your work-related equipment, but it’s always best to check with a broker at Insurance Jack.
Also, you may need to opt for additional liability coverage if people are visiting your home for professional reasons. Personal liability coverage offered through a basic home insurance policy will not be valid in the event of an accident and subsequent claim.
If you have been laid off due to the pandemic, and have decided to start up your own home-based business, you need to start by registering your business. Opting for business coverage is important — either as an extension to your existing home insurance policy, or as a separate policy.
In contrast to working from home, basic business equipment coverage is not enough to protect a home-based business from public liabilities, professional indemnities, and other financial burdens. In this case, even if you have a part-time home business, you would need a business insurance policy, which includes the following coverages:
- General Liability Coverage — This would protect you from any kind of liabilities for physical or financial harm to others caused by your home-based business. For example, when a claim is filed against you for an accident that injured a customer while at your home for business purposes.
- Damage to Business Property Coverage — Just like your home insurance policy that covers damages to your home and your possessions, this type of coverage is essential to protect damages to business property. It protects business equipment, premises, inventory, etc. from fire, flooding, theft, and other insured perils. This coverage is separate from your basic home insurance policy and will vary depending on the type of business you run, the type of equipment and raw materials you’re using, and where you conduct business.
- Errors and Omissions Coverage — This protects you when a customer claims that your product, service, or advice was inadequate or negligent, and led to physical damages, emotional distress, or financial losses. If a suit is brought against you, this protection would cover legal fees for your defence, whether or not you’re liable.
- Business Interruption Coverage — Will ensure the continuity of business income in case of losses incurred due to damages to the business premises, equipment, inventory, products, etc.
- Employer Liability Coverage — If you hire an employee or intern to help you with your business, this coverage would pay for any injuries that they might sustain while working for you.
It’s important to note that you have options when it comes to insuring a home-based business. You can a) choose to add business coverage endorsements to your home insurance policy or b) purchase a separate business insurance policy. It all depends on the size and scale of your home-based business.
In conclusion, working from home doesn’t impact your home insurance coverage, but you should get in touch with one of our expert brokers just in case. You may need a different policy for working from home arrangements. And, if you’re starting up a home-based business, make sure you have the right coverage in order to protect your business from various types of damages, claims, and liabilities.