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Don’t assume your home insurance covers working from home

Nov. 8, 2022
3 mins
A man sits drinking a coffee while scrolling through his computer

This article has been updated from a previous version.

As living with the coronavirus and its many variants has become the new normal, so has working from home. Many office workers are either on a hybrid schedule, commuting to the office anywhere from one to three times a week, or continuing to work entirely from home. Given this, now is a good time to check how working from home affects your home insurance.

While you may think your insurance covers you for anything that happens inside your home, work-related activities may not be covered if you’re an employee or entrepreneur running a business out of your residential property.

How working from home as an employee affects your home insurance

If you are working from home for some or all days of the week, the home insurance coverage you need depends on who provided your computer and other home office equipment.

If your employer provided you with a computer, monitor, desk, or chair, it may already be covered by your employer’s commercial policy.

In some cases, companies will have agreement clauses that stipulate they won’t be held responsible for damage or losses to equipment while it’s not in the office. So, if you happen to drop your laptop on the way to the couch because you want to catch up on the news, there’s a chance it may not be covered by your employer. You should verify with your personal home insurance provider if you would be covered in such a situation.

You should also review your personal home insurance policy or contact your insurance provider to find out if you need additional coverage. Working from home may be considered “incidental business use,” which may be excluded from a standard home insurance policy.

How working from home as an entrepreneur or business owner affects your home insurance

Many entrepreneurs may have started their businesses at home but moved out as it grew and flourished. However, as tougher lockdown measures were implemented in some parts of the country, working from home was strongly recommended by government health officials. Even now, as the pandemic has eased, but rent prices continue to skyrocket, many have resorted to moving their businesses back home.

If this is the case, it’s very likely your existing home insurance policy won’t cover you if you need to file a claim. You should get in touch with your insurance provider to let them know that your business activities are now being conducted from your home, as you may require a commercial property insurance policy.

Although working on a computer in the comfort of your own home won’t likely increase your liability risk, there are other things to consider. You may have clients, employees, customers, suppliers, or others who have to regularly visit your property for business reasons. Any increased foot traffic to your home can lead to an increase in the possibility that someone could be injured on your property.

You will also need to review what equipment is owned by you and what’s owned by the business. Although some home insurance policies will provide limited coverage for computers and furniture, you should have your business equipment covered at its replacement cost, not its depreciated value. And if you have to store physical inventory in your home, you’ll need to get additional coverage there, too.

Operating your business from home means there’s always the possibility that something unexpected will happen and interrupt your business. If you’re in a condo, there may be a fire in another unit that prevents you from working. In a house, there’s the possibility an extreme weather event will force you out of your home.

In these cases, such types of business interruptions aren’t likely to be covered by your home insurance. While you might be able to get additional coverage added to your current policy, it’s best to contact a commercial or business insurance provider for the appropriate coverage. You may want to consider errors and omissions insurance (also known as professional liability insurance), which is for those working in professional services such as lawyers, accountants, or healthcare professionals. This type of insurance covers legal costs in the event you’re sued due to negligence that causes financial losses or bodily injury.

Does working from home affect your auto insurance?

In 2020, many auto insurance providers gave discounts to clients who were no longer commuting and working from home. If you returned to work last year but have been told to resume working from home again, you may be able to have your car insurance premium reduced for lower mileage.

If your job centres around the use of your vehicle — for instance, you’re delivering food or carrying passengers to and from their destinations — your current auto policy may not cover you. You will likely need to purchase commercial auto insurance.

If your work situation has changed, in any way, contact your insurance company or broker to find out if you need to get additional coverage.

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Craig Sebastiano

Craig Sebastiano is an award-winning writer and editor with more than a decade of experience in journalism, marketing, and communications. He’s written about a number of financial topics, including investing, real estate, robo-advisors, mortgages, credit cards, pensions, taxes, insurance, RRSPs, and TFSAs. Craig’s work has appeared in MoneySense, Morningstar, Benefits Canada, Advisor’s Edge, Job Postings, and Ryerson University Magazine. He has completed the Canadian Securities Course and is an avid do-it-yourself investor.

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