As you know, having insurance can protect you from unexpected issues that could cost you and your business a lot of money. We buy insurance for our homes, cars, rental properties, and even jewelry.
But…as a remote worker, do you need insurance to protect yourself?
In this post, we’ll explore the way insurance works for remote workers, various types of insurance available, top providers of remote worker business insurance, and costs involved with insuring yourself.
Jump to a topic:
- How insurance works for remote workers
- As a remote worker, do I need business insurance?
- Remote working business insurance vs home insurance
- Types of insurance for remote workers
- Top remote working business insurance providers
There is no specific comprehensive insurance policy for remote workers that exists today as you might have on your home, car, or health. The closest you have to a comprehensive policy is called a business owner policy (BOP) which combines both General Liability and Commercial Property insurance. For remote workers running their own businesses, you often do not need a BOP. As a remote worker, you may only need a single policy type.
The type of remote work you are completing out of your home will dictate the type of insurance you will need.
For example, if you have clients visiting your home on occasion, you may only need a homeowners policy endorsement to add business coverage. If, however, you are a web designer working with hundreds of clients a year on their online presence, you may need to obtain an errors and omissions policy for web designers which can cover you for creative differences (vs expectations), functionality issues, or copyright infringement.
Just because you work from home in your pajamas doesn’t necessarily mean you’re off the hook as it relates to needing business insurance. However, there are some exceptions we will discuss.
If you are running a home-based business as an independent contractor, insurance may be a good idea. Whether your clients physically come to your home or are virtual, you could be exposing your business, assets and personal property to risk. Homeowners’ policies may not be enough coverage for certain issues. Many homeowners’ policies include exceptions for home-based businesses and will not cover losses related to the business.
If you are working remotely for an employer as a “W2 employee”, odds are you won’t need insurance. However, do check with your employer before entering into any employment relationship to ensure they are adequately protected. For example, an unhappy client could present a lawsuit for mishandling sensitive customer information. If your employer doesn’t cover remote employees in their policy, this could put you at risk for losing your job, or becoming involved in the lawsuit.
Bottom line is: you’re better safe than sorry. Protect yourself when you can.
Now, let’s review the difference between home based business insurance and home insurance. Generally, as a remote worker doing business out of your home, you would be seeking commercial insurance for home-based businesses.
If you have the following things happening in your business, you may need commercial insurance:
- If business is done out of your home in a manner where clients, customers, partners, or vendors come in to your home. To protect yourself from accidents, you may want to review policies for general liability.
- If you have business property in your home such as inventory, equipment, or computers that is exclusively for business use, you may want to review policies for commercial property.
- If you are providing a service to clients such as legal advice, web design, digital marketing, tax or accounting, you may want to review policies for errors & omissions.
- If employees work out of your home (excluding family), you should review policies for workers compensation. Workers compensation policies are state dependent, so consult an insurance professional in your area for assistance.
Typically, a home insurance policy doesn’t cover the above types of circumstances. However, check with your home insurance provider as they may be able to do what is known as a homeowners policy endorsement. This is add-on coverage that can cover business equipment if it is less than $10,000.
There are 5 main types of insurance for home-based remote workers that you should consider.
I also threw in a few bonuses to consider!
1. Homeowners Policy Endorsement
- Uses an existing homeowners policy, increases limits and adds business insurance.
For remote workers, you may only need a homeowners policy endorsement. A homeowners policy endorsement is an extension of coverage on your existing homeowners insurance policy.
The average cost of a homeowners policy endorsement is $25-$50 per year. The coverages on equipment are typically limited to $2,500. There are cases where insurance companies will double the coverage to $5,000 for as little as $20-$30 extra a month. If that is a requirement, be sure to ask your insurance provider if this is possible.
There are two types of policy endorsements you may need for your home business:
- Homeowners property endorsement: This protects equipment, computers and inventory.
- Homeowners liability endorsement: This limits the liability on your business for clients, vendors or other business related guests that visit your home.
Who is this best for: Remote workers who have home businesses that rarely have clients visiting and do not have a need to cover business property.
2. Commercial General Liability
- Basic liability coverage that protects you from 3rd party bodily injury or property damage claims.
Commercial general liability is used to protect your business from third-party injury, property damage, and related medical and legal costs. If you have clients visiting your home and they slip and fall on your freshly mopped kitchen floor, this type of insurance would generally cover them. Another common feature of commercial general liability insurance is coverage for you if you are working remotely outside of your home.
Who is this best for: Remote workers running businesses from their homes with frequent visits from third-parties, day care services, personal tutors, child care services, and other types of businesses you may run from your home.
3. Commercial Property Insurance
- Covers property used for the business such as computers, inventory, and equipment.
Commercial property insurance typically covers your business-related property which could include computers, equipment, or inventory. Events such as fire, vandalism, theft, or weather incidents can be covered in commercial property insurance. Typically, the insurance provider will either repair or replace your business property.
Who is this best for: If you have expensive assets such as inventory for eCommerce (eBay, Amazon, etc.), businesses that store their equipment in their homes, computer server equipment, lawn maintenance (where they might store equipment on their property), and other businesses like these.
4. Errors & Omissions
- Covers mistakes, negligence, or bad advice.
Errors & Omissions insurance (E&O) protects businesses from claims based on negligence, errors, or poor advice that result in client business losses. This type of insurance protects your business from legal fees if you are sued by a client.
Who is this best for: FInancial, legal, health, web developers, consultants, and real estate agents. If you are in the business of providing advice or services that could cause financial risk or damages, E&O insurance is generally a good idea.
5. Workers Compensation
- Covers medical bills and wage replacement for your employees if they are injured within your home.
Workers compensation covers employees and your business for any work-related injury or illness. Workers comp provides benefits that include medical bills, lost wages, and other benefits.
Who is this best for: Laws vary by state. For example, in Maryland, every employer must provide workers’ compensation insurance if they have one or more employees. In Kansas, however, it is mandatory for all employers with employees with gross payroll over $20,000. Be sure to check the laws in your state to be sure.
6. Bonus: Cyber Insurance
- Protects businesses from losses related to data breaches from the exposure of sensitive information.
As data management becomes more of the norm in the business world today, cyber security becomes even more important. It seems every day we hear about some new incident. Cyber insurance covers the high costs of a data breach. Often times in a data breach, a business can encounter business interruptions, customer concessions, security overhauls, bankruptcies, and even business closures. If you are dealing with sensitive data on behalf of your clients, you may be a good candidate for cyber insurance.
In my experience, when doing business with larger clients (such as a Fortune 500 client), their Information Security Departments will often require you carry cyber insurance. I have seen requirements that businesses carry between $1,000,000-$5,000,000 in cyber insurance.
Who is this best for: Businesses who deal with sensitive information on behalf of their clients such as personally identifiable information (PII), financial information or other types of data that could be costly if breached by a criminal.
7. Bonus: Commercial Auto
You may think commercial auto insurance only applies to food trucks, delivery drivers or towing companies. What if your or one of your employees were running an errand or visiting a client and they are involved in an accident?
This type of policy generally covers both liability and physical damage that can occur when using a vehicle for work purposes. The damage could be vehicles driven by employees or bodily harm to others.
Commercial auto can cost between $1,200 and $2,400 annually. The usual factors that affect the price of personal auto insurance such as driving record, vehicle model, age and value apply to commercial auto.
The main benefit of a commercial auto policy versus a personal auto policy is that you can fit all employee drivers under one single policy.
Who this is best for: Any business that frequently uses a vehicle in the course of daily business. The use of the vehicle can be for client visits or even employee use of the vehicle for errands.
8. Bonus: Employment Practices Liability
According to Jury Verdict Research, employee lawsuits have risen over 400% over the past 20 years. Employment Practices Liability insurance protects your business from lawsuits that could arise from employees. These could be from a number of issues such as sexual harassment, discrimination, Family Medical Leave Act violation and other issues.
Court costs can range from $15,000 to $30,000 if settled outside of court. Cases brought to trial can cost your business on average $175,000. An annual premium for Employment Practices Liability insurance is between $800 and $3,000. You can expect coverage between $10,000 to $2 million.
Who is this best for: If you have several employees, insurance like this may be a good idea for you to consider.
9. Bonus: Umbrella Policy
An umbrella policy extends the coverage of your existing policy. This can be backup coverage that will allow your business to be protected in the event that the original policy limits are hit.
Generally, an Umbrella Policy can be added to your existing policies such as general liability, employment practices liability, commercial auto, and others.
Generally, you can expect to spend around $400 a year per $1 million of coverage.
Who is this best for: An umbrella policy would be best for the risk averse remote working business owner who enjoys the peace of mind of being ultra-protected.
AP Intego is a technology-forward business insurance company who caters to the small business. They partner with leading business providers to shop for the best possible rate and coverage for your business.
They offer the following insurance types:
- Workers’ Comp – industry leading Pay As You Go option.
- Business Owners Policy – packaged insurance product sometimes known as “business liability”.
- General Liability – “slip and fall” insurance protecting your business from third-party lawsuits or other kinds of problems interacting with the public.
- Commercial Property – this policy protects harm to your workspace, valuable documents, equipment, inventory and much more.
- Cyber Liability – protects your business from the consequences of a data breach. With AP Intego, you don’t just receive a check for incidents, you will receive a “SWAT team” of professionals to help you get back up and running.
- Errors & Omissions – protects you if a client sues you over a mistake.
- Commercial Auto – protects automobiles that are used for business purposes. This could be you or an employee driving to a client visit, for example.
- Employment Practices Liability – this policy protects you from lawsuits originating from employees of the company for a variety of issues (wrongful discipline, sexual harassment, etc.).
- Umbrella Liability – this policy can be added to your existing policy to extend the coverage beyond the limits of your existing policy.
Other great providers to consider:
In this article, we reviewed how insurance works for remote workers. There is no comprehensive policy for remote workers, but there is a collection of policies that you can buy that can help protect you and your business.
Next, we explored the topic of whether you need business insurance or not as a remote worker. Depending on your circumstances, you may need business insurance. If you are an independent contractor providing advice to clients, for example, it may be a good idea to buy an Errors & Omissions policy. If you are a W2 employee, your employer typically covers its employees. However, it is a good practice to check with your employer to check if their policy extends to remote workers.
We reviewed the main differences between home insurance and home-based insurance. In some cases, a homeowners policy endorsement may be sufficient to cover you. In other cases, you may need to purchase home-based business insurance.
We then went over the 5 main types of insurance provided to small businesses and a few bonuses:
- Homeowners Policy Endorsement
- Commercial General Liability
- Commercial Property Insurance
- Errors & Omissions
- Workers Compensation
- Bonus: Cyber Insurance
- Bonus: Commercial Auto
- Bonus: Employment Practices Liability
- Bonus: Umbrella Policy
Lastly, we reviewed top remote working business insurance providers and their basic policy coverages.
Question: Let me know in the comments what other protection considerations a remote worker should consider.
This post is for informational purposes only and is not legal or business advice. Neither myself or my affiliates represent or warrant that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors.
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