Working from home has become more common over the years, allowing employees to save time and money with a home office. Flexibility and work-life balance also make working from home attractive. But, despite all its benefits, working from home can affect your insurance plan, leaving potential coverage gaps.
Home insurance plans are designed to cover personal property and liability, meaning the policy has little or no coverage for business liability and property. So, how can you make sure that you are fully covered? Let’s see the details; Ultimately, you’ll 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 effect on your homeowner’s or renter’s insurance policy. For example, many home policies include exclusions for business activities. But in some work-at-home situations—such as a full-time employee occasionally working remotely—it has little impact.
Most home insurance plans include limited coverage for business equipment: up to $2,500 in onsite coverage and $500 in offsite coverage. The employer’s insurance plan, however, is usually the first policy used to cover damages.
However, some business risks, such as a child care center in your home, are expressly excluded from a homeowner’s plan and can directly interfere with your home insurance coverage.
Working from home to run a small or freelance business almost always affects your home insurance. A homeowner’s plan does not adequately cover your business risks. While limited coverage may protect some business assets, there is no coverage for business liabilities. So, if a customer is injured on your property, your home insurance policy will not cover the claim.
Also see: 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 adequate coverage. For example, if you need more than $2,500 of onsite business property coverage, you can increase the coverage limit.
If you’re an employee and not an independent contractor, you’re likely covered by your employer’s insurance plan for business property and workers’ compensation and probably don’t need additional coverage. For example, if your work laptop is damaged in a fire, your employer’s commercial property will cover the cost of the damaged laptop.
Additional coverage is required if working from home is related to your own independent business. Because home owner insurance policies typically exclude risks caused by businesses, you may need to add an endorsement or a home-based business policy or purchase a separate business owner insurance policy.
Finally, if your job involves driving, you’ll want to review your personal auto insurance policy because 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?
If you are not a W-2 employee, home insurance is a tax-deductible expense. If you operate a small business from your home, your home insurance premium is deductible. Small home 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, then 50% of the premium is a deductible business expense.
Do I need any insurance to run a business from home?
The type of insurance you need to run your home business depends on the scope of your business. For example, if you are a self-employed independent contractor with no onsite visitors or employees, a typical approval Adding to your homeowner’s policy is enough. For example, business property endorsement increases coverage of business property on and off premises. And a business pursuit endorsement occasionally adds liability coverage for clients or visitors who come onsite for business purposes.
A Home based business insurance policy This is the next level of coverage for a home business and great for businesses with few employees, the occasional onsite client or delivery staff. This insurance plan is added as a rider to a home insurance plan and extends business coverage beyond liability and property. For example, it also covers
- Home office equipment
- Important documents
- Lost income due to business interruption
A Business Owner’s Policy (BOP) Or small business insurance is a stand-alone policy that covers businesses that operate out of a private home A business owner’s policy is the most comprehensive coverage option compared to an endorsement or home-based business insurance rider. A BOP is written separately from a homeowner’s policy and includes business liability insurance and business property insurance.
Do I have to tell my insurer I’m working from home?
If the work you do from home is for your business, either as an independent contractor or small business owner, you need to tell your insurer. Your homeowner’s policy does not cover any business-related liabilities or incidents. First, you need to check that your business activities do not interfere with your home insurance, and then you need to acquire coverage for your business.
However, in some work-from-home situations, you do not need to tell your insurer that you are working from home. For example, an employee who occasionally works from home may not need to notify their insurer.
Still, it may be a good idea to contact your insurance company if you think your line of work poses risks to your personal property that may be excluded or present a conflict of coverage. For example, a fire in your home due to business activities may not be covered by your home insurance plan. So, if you are concerned about coverage, it always helps to check with your insurer to verify that you are fully protected.