In recent weeks, there have been some high-profile employers such as Yahoo and Best Buy that have taken some drastic steps in reducing the availability of telecommuting to much of their staff. However, the San Francisco Chronicle suggests these two employers are anomalies as the workplace is likely to continue evolving in favor of home-based workers. If you find yourself in such a position, you should understand the potential insurance implications of working from home. Instead of providing you with an office where furniture, utilities, and insurance are all an afterthought, your telecommuting lifestyle depends on you providing the resources for your workplace.
As you might know, one of the key exclusions in a standard home insurance policy relates to business pursuits. In most policies, the exclusion for anything arising out of your business is fairly broad. For example, in one standard policy form, the definition of “business” includes your trade, profession or occupation. In another section of the policy where it discusses coverage for the dwelling and dwelling extensions, it specifically excludes any unattached structure on your property that is used in whole or in part for business. This can get quite tricky as it might exclude a dedicated office space in a guesthouse on your property. It’s not uncommon for people working from home to want a separate, quiet space in which to conduct their work. Unfortunately, this can also cause a problem with your insurance coverage.
In addition to the coverage for damage to your home, there are exclusions for personal liability arising out of your business pursuits. As with the property damage coverage, the home insurance policy is careful to exclude liability arising out of your business. If you have a job where you are required to meet with people and potentially conduct business meetings in your home office, you need to give this activity some serious consideration. If your guest were to fall and become injured in your home, you would potentially be facing a personal liability claim. In any other situation, it’s likely that your home insurance policy would handle the matter on your behalf. However, because it’s a work-related activity, the policy might exclude it as a business pursuit, leaving you exposed to some personal liability without the benefit of your home insurance policy.
Before signing on for a telecommuting position, you should consider the ramifications of such a job. Once you have evaluated the risks, you should discuss these concerns with both your home insurance company and your employer. It’s possible that either or both can resolve these issues for you. Your home insurance company may be able to endorse your policy to allow the telecommuting activities and not exclude claims arising out of them. Your employer may also be able to offer you coverage on their commercial insurance policy. It’s also possible that your employer may pay any additional insurance expenses that are the result of your telecommuting.
In either event, you need to deal with these uncertainties before they become a problem. Keep in mind that you are not the first person to telecommute and it’s likely that both your insurance company and your employer have encountered this situation previously. However, in many cases, nothing will happen until you take the initiative to make sure you are properly insured.