For many people, working from home is the ideal job. You don’t have to commute to the office every day. You don’t have to get dressed up and ready to impress coworkers. You even get to skip the boring water cooler chat.
Instead, you simply get up, walk to your home office, and get your work done. You might even be more productive working at home.
If you’ve finally scored the work at home job of your dreams or are forced to work from home for another reason, there’s one aspect that few people consider before starting work at home. That’s insurance.
Depending on your situation, you may need to update your insurance products to make sure you’re still completely covered.
Disclaimer: each insurance policy is different
Each insurance company has its own policies that may vary from state to state. To make matters more complicated, you may have added or may be able to add a rider, or extra coverage, to your insurance policy to cover particular situations.
Essentially, this means your neighbors’ insurance may be slightly different from yours. While they all cover the same general things, each may have different exceptions or policy limits for certain times.
I learned this first hand after a category five hurricane hit my old hometown. What was covered for one friend was excluded for another.
Ultimately, your insurance policy determines what claims are paid out, what is covered, and what isn’t. This is the ultimate source you should reference, with your insurance agent being a close second.
If you find you need more coverage, head over to Policygenius where you can compare multiple quotes from a variety of different companies, all in one place.
How homeowners insurance works
Homeowners insurance has a list of specific coverages with different amounts for each type of coverage. Common major coverage groups are as follows:
- Coverage A – Insures your dwelling or structure of your home.
- Coverage B – Insures other structures on the property, such as sheds or fences.
- Coverage C – Insures personal property, such as furniture, clothing, pots and pans, etc.
- Coverage D – Insures against the loss of use for your home, such as being unable to use it after a tornado rips the roof off.
- Coverage E – Insures against personal liability, such as a person slipping and falling in your home and then suing you.
- Coverage F – Insures against medical payments to others for those injured on your property.
Working from home could most often impact your policy for Coverage C, Coverage E, and Coverage F.
How working from home affects your policy depends on your specific circumstances. In some cases, you may not need to adjust your homeowners or renters insurance at all. In other cases, you may need to buy additional insurance.
Are you an employee working for a company?
Working from home as an employee of a company has become common thanks to the coronavirus restrictions. If you’re actually a W-2 employee receiving a paycheck, chances are your homeowners insurance will be fine as is.
You should check with your employer to make sure their equipment is covered by their insurance policy when it is in your home, though.
Generally, the company’s insurance will cover their property wherever it is, but it’s best to double-check. You don’t want to be on the hook for the cost of the company’s property if your house burns down.
Have you set up a home office with expensive items?
There may be cases where you need to increase your homeowners insurance coverage. Let’s say you never had a home office before and decided to deck out a room with new furniture.
You paid for this furniture yourself and you own it. If this furniture addition puts your total personal belongings above your Coverage C limits, then you need to increase your Coverage C insurance limits to make sure it’s covered.
My Coverage C limits on my policy are 50% of my dwelling limits, or Coverage A limits. I don’t have nearly enough personal property to reach this amount, so adding new furniture for a home office wouldn’t push me over my limits.
Read your policy to see what your limits are. Make sure you’re under them if you’ve purchased new personal property relating to your home office.
Are you a contractor or business owner?
Things are much more complicated if you aren’t a W-2 employee. Specifically, 1099 contractors, which are independent contractors for a company, and business owners that work from home may need to take extra steps.
In these cases, you likely need to provide your own business insurance to cover your liability properly. As a 1099 contractor or a business owner, your business likely owns all of the equipment and supplies to run your business.
Even if the company you contract with gave you a stipend to purchase technology, such as a laptop, they likely do not own that laptop. You do. If the laptop gets damaged in your home, you’re responsible for it.
Certain 1099 contractors or business owners may be at even more risk. Many businesses require clients to visit a place of business. For example, a home-based photography business may invite clients to their home studio to take photographs. In this case, they may need business liability insurance, as well.
If your friend fell down your stairs when going to the basement to watch the big game, homeowners insurance would likely cover the costs. It doesn’t work the same way for business-related accidents.
Let’s say the photographer’s client falls down the stairs in the photographer’s home while going to the home portrait studio in the basement. Your personal homeowners insurance wouldn’t likely cover this accident because it was business-related.
If the photographer doesn’t have adequate business insurance to cover the costs, the photographer could have to pay for the costs out of their own pocket.
You may need specific business insurance
Due to these extra risks, business owners and 1099 contractors that work from home may need additional insurance beyond a homeowners insurance policy.
A business owner should always consider professional liability insurance. A proper policy can cover you up to certain limits for liabilities that arise out of the course of doing business. Make sure the policy covers your particular circumstances before you purchase it.
Next, errors and omissions insurance is another form of coverage many business owners and 1099 contractors should consider. If an error that is your fault ends up costing a client money, they may be able to go after you for the damages. A proper errors and omissions insurance policy could cover you, as long as it is written for your profession and situation.
Other types of insurance you may want to look into include commercial property liability to cover your business’s belongings and worker’s compensation insurance to cover your employees if they get hurt on the job.
You may be able to add riders to your personal homeowners insurance policy to cover limited business activity at home without getting a new type of insurance policy. Check with your insurance agent to see if this coverage would insure your business against the risks of working at home.
Get new insurance quotes and potentially save with Policygenius
If you’ve discovered you need more insurance, or even if you didn’t, you should check out Policygenius to see if you can save on your insurance costs. Policygenius allows you to fill out a single application for a type of insurance and then sends you quotes from multiple insurance providers.
Policygenius’s process benefits you in two ways. First, you save time by avoiding the hassle of filling out a different application for each insurer you want a price quote from. Second, it can save you money by showing you a few price quotes side by side. This allows you to pick the best-priced insurance policy that meets your needs.
Check your current insurance policies to make sure you’re appropriately covered whether you’ve just started working from home or have been doing it for years. If you’re not covered adequately, call your insurance company and increase your limits where necessary.
You may want to get new quotes to see if you can save on your insurance costs while you’re thinking about it.
Business owners and 1099 contractors may need to get more insurance to cover their business equipment and liability. Even though dealing with insurance can be a hassle, you’ll be glad you did if you ever have to file a claim.