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As technology continues to advance, a growing number of workers are choosing to telecommute or work from a distant site such as a home office. Telecommuters, as they are called, usually connect with their clients and home office (if they have one) via phone and the Internet. This lifestyle has several attractions, such as no traffic jams, no need to worry about your wardrobe every day, less money spent on travel costs, and more flexible hours.
However, with the rise of telecommuting comes a whole new set of risks and liability exposures. These risks are not usually addressed within conventional insurance policies.
The Limitations of a Homeowner’s Policy: Telecommuters may just be working from their home office or at their kitchen table but the business equipment they are using needs as much insurance coverage as those that are in an office space. Unfortunately, a person’s current homeowner’s insurance may only provide limited coverage for such items.
This means if a telecommuter’s home is consumed by fire or damaged by a storm, he/she cannot necessarily expect the homeowner policy to cover all of the business equipment. In most cases, homeowner’s insurance policies set a coverage limit of $2,500 on home office equipment. For this reason, telecommuters may find this policy insufficient in replacing all their business equipment; including items such as computers, printers, monitors, scanners, and phones.
Homeowner policies typically set an even lower limit of $250 for damaged or lost equipment while a person is traveling or away from home. So for example, if a telecommuter’s $1000 laptop is lost at an airport, they cannot turn to the homeowner policy to be fully indemnified.
Work at Home Liability Coverage Needs: People who work from home also have liability exposures. For example, a telecommuter may be held responsible if a client or customer is injured while on his/her premises. Unfortunately, a regular homeowner policy will not usually cover you for injuries that occur to others (either on or off your premises) that are related to your business.
Insurance Choices for At Home Workers: Telecommuters working for a company or running their own home business should consider at the very least adding an endorsement to their homeowner’s policy to increase the property damage limits up to $5000. In most cases, that amount would be enough to cover all of the business property on the premises. To deal with liability, many insurers offer a business pursuits endorsement to provide liability coverage to those employed by someone else for incidents that occur away from their premises.
Business owners who operate from home have a couple of choices; the permitted incidental occupancies endorsement to your homeowner policy takes away the business pursuits exclusion and provides much needed liability coverage. Another more comprehensive option is a business owner’s policy (BOP), which combines building/personal property and liability coverages into one policy that is usually less expensive than insuring these areas separately. A BOP is especially beneficial for those that do not already have homeowner’s insurance.
There are other insurance considerations for telecommuters as well; these include commercial vehicle insurance if you use your car for work and professional liability coverage (also known as malpractice or errors & omission insurance) for those working in certain professions. Since each individual circumstance is unique, it is best to speak to your insurance agent about the endorsements and/or policies you need to make sure your telecommuting activities are fully covered.
About The Author
Todd Balderson has been protecting families and businesses through insurance coverage since 1996. He is the founder of Balderson Insurance Agency and serves clients in Maryland, DC, and Virginia. Todd is known for reminding people about how “insurance is more crucial to building your wealth than investments because without insurance, it’s easy to lose your assets.” Learn more about Todd and the insurance protection he offers at https://www.BaldersonInsurance.com
I didn’t realize that it was such a challenge to receive compensation from homeowners insurance. Is definitely worth looking into prior to any bad situations