Working from home has become more common over the years, allowing workers to save time and money with a home office. Flexibility and work-life balance also make working from home attractive. But for all its advantages, working from home can affect your insurance plan and leave potential gaps in coverage.
Home insurance plans are designed to cover personal property and liability, which means that the policy has little or no coverage for business liability and property. So how can you make sure you’re fully covered? Let’s see the details; in the end, you will be able to determine if your remote work is adequately covered.
Does working from home affect your insurance policy?
Working from home usually has some impact on your homeowner’s or renter’s insurance policy. For example, many homeowners policies include exclusions for business activities. But some work-from-home situations, such as a full-time employee occasionally working remotely, have little impact.
Most home insurance plans include limited coverage for commercial equipment: up to $2,500 of on-site coverage and $500 of off-site coverage. However, the employer’s insurance plan is often the first policy used to cover losses.
However, some business risks, such as a child care facility in your home, are explicitly excluded from the homeowner’s plan and may directly interfere with your homeowner’s insurance coverage.
Working from home to run a small or independent business almost always affects your home insurance. The homeowner’s plan does not adequately cover your business risks. Although limited coverage may protect some business properties, there is no coverage for business liability. Therefore, if a customer is injured on your property, your homeowners insurance policy will not cover the claim.
See Also: 10 Work At Home Insurance Jobs
Do I need additional insurance to work from home?
You may need additional insurance as a remote employee if your homeowner’s plan does not have enough coverage. For example, if you need more than $2,500 of on-site commercial property coverage, you could increase your coverage limits.
If you are an employee and not an independent contractor, you are most likely covered by your employer’s commercial property and workers’ compensation insurance plan and probably do not need additional coverage. For example, if your work laptop was damaged in a fire, your employer’s business property would cover the cost of the damaged laptop.
Additional coverage is needed if working from home is related to your own independent business. Since homeowners insurance policies generally exclude risks caused by businesses, you’ll need to add an endorsement or home-based business policy or purchase a separate business owner insurance policy.
Lastly, if your job involves driving, you’ll want to review your personal auto insurance policy, as most insurance providers won’t cover accidents while the vehicle is being used for business use.
Can I deduct home insurance if I work from home?
Home insurance is a tax deductible expense if you are not a W-2 employee. Your home insurance premium is deductible if you operate a small business from your home. Small home-based businesses can claim home insurance as a business expense under the home office deduction.
Home insurance premiums are deducted based on the percentage of your home used for your business. So if your business uses 50% of the home, 50% of the premium is a deductible business expense.
What insurance do I need to run a business from home?
The type of insurance you need to run a home-based business depends on the scope of your business. For example, if you are a self-employed independent contractor with no site visitors or employees, a simple approval added to your homeowners policy is enough. For example, the commercial property endorsement increases coverage for commercial property on and off the premises. And a business activities endorsement adds liability coverage for the customer or occasional visitor who comes to the site for business purposes.
TO home business insurance policy it’s the next level of coverage for a home-based business and is great for businesses with few employees, occasional customers on-site, or delivery personnel. This insurance plan is added to a home insurance plan as a rider and increases business coverage beyond liability and property. For example, it also covers
- technology
- home office equipment
- important documents
- lost revenue from business interruptions
TO business owner’s policy (BOP) o Small business insurance is a stand-alone policy that covers businesses that run out of personal homes. A business owner’s policy is the most comprehensive coverage option compared to a commercial home-based insurance rider or endorsement. A BOP is written separately from the homeowner’s policy and includes commercial liability insurance and commercial property insurance.
Do I have to tell my insurer that I am working from home?
If the work you do from home is for your business, whether as an independent contractor or small business owner, you should tell your insurer. The homeowner’s policy does not cover any liability or incident related to the business. First, you must verify that your business operations will not interfere with your home insurance, and then you must purchase coverage for your business.
However, in some work-from-home scenarios, you will not need to tell your insurer that you are working from home. For example, an employee who occasionally works from home probably doesn’t need to notify the insurer of him.
However, it may be a good idea to contact your insurance company if you believe your line of work brings risks to your personal property that may be excluded or present a coverage conflict. For example, a fire in your home caused by business activity may not be covered by your home insurance plan. So if you’re concerned about coverage, it’s always helpful to contact your insurer to make sure you’re fully protected.
