What insurance do I need if I work from home or run a small business from my house?

Today, more than 70.4 million Americans are working from home or operating some form of home-based business, and this number is expected to grow.

Whether you're a freelancer, consultant, or just working remotely, it's important to understand what types of risks working from your home can pose, and how insurance can help alleviate financial impact of those risks.

Let's explore common questions to help you figure out if you need insurance, and what insurance you may want to consider if you work from home or run a small business from your house.

Do remote employees need special insurance?

It depends. Working remotely as a full-time employee can present specific risks for both you and your employer. It is important to talk with your employer to understand what's covered under the company's business insurance policy, and assess your own personal risk. You'll want to figure this out before deciding if you want to buy additional coverage for yourself.

Let's look at two examples

1. Say you handle sensitive client data and you have a data breach while working from home. Do you know if your employer's business insurance covers this situation? Cyber insurance can protect you from financial losses resulting from data breaches, such as legal fees, notification costs, and even potential damage if clients suffer losses due to the breach.

   If your employer does not have coverage for this, you may want to consider a cyber liability insurance policy to protect against this scenario.

2. Let's consider a scenario where a fire breaks out in your home office, making your living space uninhabitable. During the repairs, you'll have to find somewhere else to live and work. Do you know if your homeowner's, condo, or renters insurance provides coverage for additional living expenses?

   Many policies include this coverage, but the specifics can vary widely, and some may not cover all the costs associated with temporary housing. You might want to consider purchasing a policy (or upping the limits of your current policy) to specifically address this gap.

Ultimately, it's up to you to understand the coverage that your company has, how it covers you, and your comfort level regarding any gaps.

What insurance should a sole proprietor or contractor consider?

If you're a sole proprietor working from home on temporary contracts, you'll likely want insurance specific to in-home or small businesses. While what type of insurance coverage you buy should ultimately be determined by your type of business, if you're consulting from your home, liability coverage is a good place to start.

As an independent contractor working from home, you should look into general liability coverage and professional services insurance. Combined, these two coverages can help protect you financially from risks like

• Lawsuits made against you for claims that you missed a deadline or made a costly mistake in your work that caused them financial harm or other damages.
• Claims related to bodily injury or property damage involving customers. For example, if a client visits your home office, trips, and gets injured, they could sue you for damages.

Keep in mind that all situations are unique, so your best bet is to reach out to an insurance company that covers small commercial activities and talk about your options.

Does homeowners or renters insurance already cover my home-based business?

Homeowners or renters insurance may offer a small amount of protection for business activities out of your home, but it may not cover your business activities at all. Some common limitations include

• Business equipment like laptops
• Data breaches
• Lost income
• Employee injuries

Keep in mind that your personal auto insurance policy also will not cover use of your vehicle for business purposes.

Can I add business coverage to my existing homeowners insurance?

Yes, some insurance companies allow you to add extra coverage to your homeowners policy for business-related risks. These are called endorsements, and they let you increase your coverage without needing a separate policy.

When should I consider a separate small business insurance policy?

You should consider getting separate business insurance if your homeowners or renters policy doesn't offer enough protection. Here are some questions to ask yourself

• Do you have expensive business equipment?
• Do clients regularly visit your home office?
• Do you have employees working from your home?
• Does your work involve professional liability risks, like consulting or editing?
• Do clients require proof of insurance for contracts?
• Is your business growing, and could a loss lead to significant financial harm?

If you think you may need insurance beyond your personal policies, we can help you learn about all your small business insurance options.