Will My Homeowners Insurance Policy Cover My Home Office?

With the abrupt switch to home-based work, probably not much time, if any, has been given to the following thoughts:

Since the COVID pandemic started, many have been forced to work from home to minimize exposure and slow the spread of the virus. Home offices have now become work headquarters and laptops or desk computers, printers, web cams, keyboards, headsets, iPads, and tablets are now essential tools.

    • I wonder if I am covered by my homeowners’ policy for my business efforts if I am working from home?
    • Does my homeowners policy cover office equipment?
    • Am I still covered by my employer’s insurance policy for liability and business property if I work from home?
    • What steps should be taken to ensure coverage at home?

If Your Home Office Is Now Your Work Headquarters, Will Your Homeowners Insurance Policy Cover You?

If you have Michigan homeowners insurance, the first step in answering coverage questions about your home office is to read the policy to determine what is and is not covered. As with most topics in insurance, coverage answers depend on the insurance policy language. Homeowners policies usually have liability exclusions for bodily injury and property damage arising from business-related activities. Thus, generally speaking, a standard homeowners policy is not designed to cover home-based businesses or a situation of working from home.

The standard homeowners policy is designed to protect personal property while it is used for personal use. Any loss of personal items for personal use would be covered by a homeowners insurance policy for replacement cost minus the deductible amount. However, the minute personal property is used for business purposes and destroyed, there are limits in that situation on how much a homeowners policy will pay.

Important: If you don’t update your homeowners insurance to reflect the fact that you’re using your home for business purposes, your insurer could deny a business-related claim that’s not explicitly covered by your existing policy. In many cases, courts will uphold business exclusions in your policy, and you could be left to pay for damages and liabilities out of pocket.

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Coverage for business equipment used at home may also depend on “how” or “who” bought the computer, printer, or desk. If an employer purchased the computer, printer, desk, or any business equipment for use at home by an employee and, for example, this equipment is destroyed by fire, it may be covered by the employer’s insurance like it would be covered if it was destroyed at the office. Again, however, it depends on the language in the employer’s commercial or business insurance policy.

Coverage for personal liability when an employee is working from home typically has limited coverage. For example, if clients are now coming to an employee’s home for business purposes, a homeowners policy will likely not cover a client or guest who slips and falls going down outside stairs—an accidental injury—or cover medical expenses therefrom. The homeowner will pay for that injury and those expenses. An employer’s business insurance policy in that situation will probably not pick up coverage either although some business policies do cover remote workers’ liability but with that coverage also comes the requirement that the remote-at-home employee is responsible to keep a safe working environment, which means, if the injury was caused by the homeowner’s failure to keep a safe working environment, then, of course, there would be no coverage.