So, you’ve started working from home but did anybody tell you that working from home could mean you lose the coverage on your homeowners insurance policy?
Well, it can and, in fact, there are some fairly common working from home insurance issues that you can face, so let’s take a look at them and how to head them off at the pass.
We’ve split the issue into two sections, the first deals with home insurance and the second with car auto insurance.
The good news is that most home workers will benefit from a close examination of their auto insurance policy, but home insurance is more complicated.
We also use the terms home insurance and homeowners insurance interchangeably throughout.
Your Employment Status Matters For Home Insurance
The first thing you need to do is determine whether you are employed or whether you’re serving as a self-employed contractor or freelancer.
This is straightforward if you don’t already know.
An employed person is someone who receives wages from which their employer has already deducted taxes and social security payments.
A self-employed person is someone who receives a fee from which they must pay their own taxes and social security payments.
Employees And Their Employer’s Insurance
If you are an employee then there is some bad news but it’s easily offset by some good news.
When you are working from home, you are not covered by your own home insurance policy, that’s because that policy covers you for doing “residential” stuff.
So, when you’re not working, you’re covered for everything as usual, but when you are working? You’re not.
This doesn’t matter too much assuming that your employer has a proper liability insurance package. You should check this, particularly, if your employer has just implemented home working.
But assuming that they have this insurance (and it is a legal requirement that they do) then when you’re working from home, their insurer carries liability for your risks.
What can be confusing, however, is when you’re claiming not for damage done to yourself during home working but damage to property.
In that case, if you paid for an item – you need to claim on home insurance (and you should check your “business property coverage” to ensure it’s sufficient to pay out for a broken laptop, etc.).
If your employer did – you need to claim on their insurance.
The Self-Employed Liability Insurance Or Homeowners Insurance?
Unfortunately, if you’re self-employed the news is a bit bleaker.
Your homeowners insurance policy is not valid to cover your business or your working time.
And as you don’t have an employer, it’s going to be you that needs to fund the appropriate level of business insurance to cover the gap.
The good news is that this doesn’t have to be ridiculously expensive, many insurers recognize that home working is a thing now and they know it doesn’t hugely increase your risks of injury or loss.
So, if you speak to your current insurer they may be able to add some “home working” elements to your insurance policy that covers for your liabilities and risks without breaking the bank.
What About Renters Insurance?
As a rule of thumb, renters insurance will function in the same way that homeowners insurance does.
But you’ll need to examine whether you or your employer needs to sort out additional coverage.
Auto Insurance And Home Workers
It doesn’t matter if you’re employed or self-employed when it comes to auto insurance.
The good news is that home workers ought to be able to save some cash when it comes to their auto insurance.
Why? Well, you should be driving a whole lot less when you’re working from home and that should mean that you can apply for a “low mileage” insurance policy.
These are much cheaper than ordinary policies.
You may also find you can save by reducing your roadside assistance coverage too, after all, if you’re not driving as much, breakdowns become much less likely.
Final Thoughts On Insurance And Working From Home
When it comes to insurance and working from home, nothing beats professional advice and if you’re uncertain as to what’s covered and what’s not – you should talk to your employer and/or your insurance broker.
While the self-employed may find that they have to pay a little more to be fully insured, it’s worth it for the peace of mind that it brings.
And everyone should be able to save a little on their auto insurance when they work from home.
It might also help to know what the tax implications of working from home are, whether you can claim a tax rebate on your chair, and where best to live as a remote worker in the US.