November 13, 2020 Do I Need Business Insurance If I’m Working From Home?

Working from home you may want to consider a home-based insurance policy.

The business world is facing a new reality: WFH policies. Due to COVID restrictions, many professionals have had to move base from their regular offices to their makeshift setup in their living room, bedroom, or other low risk space. As the world around us changes, working from home might be the norm for the foreseeable future. So how does this affect your insurance?

Home-based businesses existed pre-COVID. The difference between a home-based business and working from home is you operating your own company and your manager allowing you to work from the security of your own home. It helps to consider what poses more risk: working from home with your business’ equipment or operating a full-scale workshop or dog boarding facility. For the latter, standard home insurance won’t cut it.

Where a commercial, home-based business insurance policy can help:

If your operations are much larger than simply adapting a WFH policy with customers coming in and going out, the daily usage of expensive equipment and an increased exposure to possible liabilities, you may want to consider a home-based business insurance policy.

You may not need an elaborate commercial policy but you could consider incorporating an endorsement to your existing home insurance policy or purchasing a separate business coverage to ensure you’re protected. Even small, start-up businesses based at home are exposed to risks everyday. Your average home insurance may not cut it as it has only low limits for business property which will likely not cover expensive technology or equipment.

Moreover, it isn’t expensive to add home-based business insurance onto your existing home policy. This cost will factor in basic liability as well as additional content insurance for business equipment, which could be upped if you were to include more expensive technology or machinery.

As someone who is working from home (even temporarily):

If you are working from home due to COVID or for any other reason, then it is worth discussing with your employer if you are covered under the company’s insurance.

If the only items you need covered are your laptop or similar chances are that your home insurance may be enough to ensure you’re protected. Always discuss with a broker to assess whether your current limits are enough to protect any valuables or expensive equipment.

How does home-based business insurance work?

For your home-based business you may have four options available to you:

• General or commercial liability insurance
• Professional liability insurance (sometimes called errors and omissions insurance)
• Product liability insurance
• Workers’ compensation insurance

Each coverage option offers a different kind of protection depending on the kind of business you run. The insurance you need will depend on the kind of service you do or if you manufacture any products.

General or commercial liability insurance

This coverage offers protection to home-based businesses from liabilities that result from error or negligence within or outside the physical business and can cover your company if it is held responsible for bodily injury or property damage. Most deductibles sit around $1,000 for this coverage.

Professional liability insurance (errors and omissions)

Businesses that offer professional services or advice need protection against legal actions claiming their business was responsible for loss due to negligence, misinformation, error, and more. Occupations like doctors, realtors, engineers and lawyers may be legally required to carry this kind of insurance. This coverage is generally more expensive than general liability because of the severe risks these types of businesses can face on the job.

Product liability insurance

If your business manufactures a product, you may need this insurance. If a client sues you due to malfunction of your product, you could be in for some considerable legal expenses. Depending on the product you make this insurance may cost you more or less.

Workers’ compensation insurance

This insurance may be mandated by provincial or state law depending on where you live. This is largely required by the construction industry as it operates to protect your workers at the job site. Depending on the trade you offer, the cost of this insurance is a percentage of your income.

To insure or not to insure?

Always inform your provider if your home doubles as a workspace because if something were to happen they can deny your claim or even void your policy! Home offices present different risks than your typical home. The most important thing you can do is to inform your insurance provider about your plans. Never lie to your insurance provider as this only increases your risk.

As many people are now working from home due to quarantine restrictions, you may want to keep your provider informed about the change – or even changes you plan to make to your living situation so that you can ensure your assets are properly insured.

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