Let’s start with the basics. Remote workers in the U.S. need insurance coverage.
At least that’s the advice of experts. And that coverage should be for their work environments and separate from the policies they have for their homes or motor vehicles.
Though some policies will cover work-related claims, often they will have limitations on what and how much they will pay. Other policies will refuse to compensate policyholders for any damages caused by a business, such as lost and stolen equipment, or provide any coverage for lawsuits stemming from business disputes.
The risks that remote workers pose to their employers are so large that businesses need to make sure that they purchase the proper coverage for their employees, experts warn. In addition, companies are legally obligated to provide employees with a safe working environment, regardless of where they work.
The potential risks to businesses don’t end there.
If customers visit a remote worker’s home office and hurt themselves, the business would be on the hook for any medical expenses, insurance and legal experts advise. Remote workers’ computer connections with weak or no security leave companies open to attacks from hackers.
“Often seemingly minor details in policy language can mean the difference between a covered and uncovered claim,” according to the law firm Pillsbury Winthrop Shaw Pittman.
New policies for remote workers
As more companies transition to permanent remote work, insurers may (and should) create new policy forms focused on companies whose workforce is primarily or entirely remote. Until then, many traditional forms include definitions and foundational terms that do not align properly with remote operations, say legal advisers. Accordingly, companies must work with their brokers and experienced coverage counsel to identify potential gaps.
“The same goes for people who own their businesses who work from home,” said Les Masterson, managing editor for Insurance.com. “Don’t expect your homeowners’ policy to cover business-related claims. Instead, talk to your insurer about getting business insurance to protect your business.”
Nationwide Insurance last month unveiled a bundle of insurance coverage targeting remote workers, including homeowners’/renters’ policies, usage-based auto insurance and identity-theft protection.
The coverage will be available in more than 30 states this summer and will include additional states and coverages in the future. According to Nationwide, it is the first carrier to create bundled coverage for remote workers. The offering is only to online customers.
“That said, you can get similar bundled coverage from other insurers, but without the branding that it’s geared for those working from home,” Masterson said.
Details to look for
For instance, many insurance companies offer pay-per-mile car insurance, such as Allstate’s Milewise, Liberty Mutual’s ByMile and Progressive’s Snapshot services.
Remote workers should also look into the deals carriers offer for consumers who drive under a set yearly minimum, such as 10,000 miles. Still, remote workers should keep in mind that the Federal Highway Administration estimates that the average American drives 13,476 a year, so this isn’t a deal for everyone. If workers do more driving, they should get commercial auto insurance to protect them in an accident.
“If Nationwide’s package interests you, it would still be wise to reach out to other insurance companies about their coverage options and get quotes from them too,” Masterson said. “Insurers bundle home and auto and other types of insurance. See what you would pay for similar bundled coverage from other companies too.”
Insurance for pandemics: a rare commodity
Forward-looking companies hoping to protect against future pandemics may find the insurance pickings slim.
Washington State’s Office of the Insurance Commissioner reviewed policies from 84 insurance companies and found that only two carriers offered coverage for pandemics in their base policies. In contrast, 15 insurers offered a limited range through endorsements to other policy owners, according to the Organization for Economic Cooperation and Development (OECD).
“Given the recent experience with Covid-19, it is likely that insurers will be reluctant to provide broad coverage for business interruption in the near future (or at least not at a cost broadly accessible to commercial policyholders),” according to the OECD. “Some reports suggest that insurers are reducing or eliminating any potential coverage for pandemic risk in property damage and business interruption policies and are considering applying various exclusions in other lines of business where some exposure is likely (e.g., directors and officers liability insurance).”
Employers must provide a safe environment
Employers also need to ensure that the home offices follow their work and safety policies and don’t have any hazards such as exposed extension cords. Proper workers’ compensation coverage is important for such matters. A 2011 court ruling found that a remote worker who tripped over her dog while fetching a fabric sample for a customer was entitled to compensation.
Safety precautions are especially important if customers are visiting remote workers’ offices. They also need to have adequate smoke detectors and fire extinguishers. The Hartford recommends that employers inspect workspaces every six months or so to ensure that workers follow established rules.
“Communicate that telecommuting is a privilege,” according to the Hartford. “Let employees know that you are allowing them to work from home as an employment perk. Make it clear that you have the right to rescind their work-from-home privileges at any time and for any reason.”
An additional wrinkle: Determining where to purchase a policy can be tricky if an employee relocated to a different state either temporarily, for a so-called workcation, or permanently.
“Historically, employers could ‘ignore’ an employee’s state of residence, but Covid-19 pushed employees out of the employer’s location and required them to set up operations in their home,” Chris Boggs of the Independent Insurance Agents and Brokers of America wrote in a blog earlier this year. “Now the state of residence matters.”