Home insurance and working from home
If you’ve decided to stay working from home beyond the pandemic, you may need to let your insurer know and adjust your cover. If you don’t, it could invalidate your policy.
When the government advised working from home where possible during the pandemic, insurers made a pledge that customers didn’t need to tell them about this change in their circumstances. In April 2020, nearly half (46.6%) of people in the UK worked from home, with the majority (86%) doing so because of the pandemic, according to the Office for National Statistics (ONS).
Government advice has since changed, but many of us are embracing remote working for good, for some or all of the time. In a NerdWallet pandemic priorities survey of business leaders, 46% said remote working would remain a permanent feature, with 26% planning to transition to it. So what does this mean for home insurance?
The effect on premiums of staying at home remains to be seen, but most insurers expect you to tell them about major changes in your circumstances, to make sure you’ve got the right level of cover.
Do you need to tell your insurer you’re working from home?
Insurers need to know about any big changes that might cause additional risk, or change the way you use your property and belongings. This will usually include a shift to being home-based on a regular basis, even if it’s just office work, which insurers call clerical work.
If you don’t tell your home insurance provider you’re working from home, it may invalidate your cover and they may not pay out in full, or at all, if you make a claim. If you only use your home to do occasional admin and are otherwise based in a workplace, you won’t usually need to do anything, though.
If you’re using a work laptop or phone that belongs to your employer, it will most likely be covered for theft and damage under their business insurance, but always check. If you have new furniture or specialist equipment for working from home that belongs to you, you may want to adjust your contents cover limit, so you’re not underinsured. And if it's worth more than the single item limit of your contents policy, you may need to list it separately.
Check your policy documents, though, as standard home insurance is designed to cover your belongings for domestic use. Though most will, some insurers won’t include office equipment, like monitors or printers, if they’re used for business or professional purposes.
If you’ve carried out major building work to provide extra or higher-spec office space in your home, such as an extension or a studio, make sure your buildings insurance policy reflects any rise in rebuild cost.
If you’re running a business from home, you must tell your insurer, as you may need additional cover if you’re holding stock, or if clients visit you at home.
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How does working from home affect your home insurance?
Standard home insurance is there to cover your home for domestic use. Most insurers will cover you for carrying out office work from home, so you may not need extra cover, but you should still tell your insurer.
A shift to working from home affects risk levels because you’re using the space differently, and it changes how your insurer assesses your cover. In theory, burglary may be less of a risk because you’re at home during the day, but accidental damage to your belongings and home might be more likely because you’re there for longer stretches of time and use them more often.
When people were home during the pandemic in 2020, the number of claims for accidental damage increased, including damage to computers and electrical items. Though children also being home too may have had a hand in that.
If you regularly have visitors to your home for work, even just for meetings, you must let your insurer know, as your cover should take account of the extra risks that accompany this.
Does running a business from home affect your home insurance?
If your business is based from home, you need to tell your home insurance provider, so you have the right level of cover in place. Standard home insurance won't usually cover you for business visits or holding stock, and the increased risks and responsibilities that come with running a business.
If you have clients or customers visiting your home, perhaps if you’re an accountant or childminder, your cover may need to be extended to ‘business use with visitors’.
If you use your home to hold business stock on the premises, it’s seen as an increased fire, theft or liability risk, and you may need extra home insurance cover for ‘other business use’. If your line of work presents specific physical risks to you or others, or is hazardous, you may need a specialist home insurance policy.
You may also need to take out business insurance, to help protect you and your business.
What extra cover is there for working from home?
If your work equipment is owned by your employer, they may have all-risks insurance. This provides cover if your laptop or phone is accidentally damaged or stolen while it’s in your possession.
If your employer doesn’t provide this cover for this essential equipment, reread the terms of your personal contents insurance, to check if items used for work are included in the cover. Speak to your insurer if you’re in any doubt.
If you’re self-employed and want cover for your work equipment in and outside of your home, you could consider business equipment insurance. This offers cover for damage, loss or theft of belongings like phones, cameras and laptops, or even tools and stock, up to a maximum amount. Depending on the policy, this can cover items in your home and away from home in the UK, Europe or worldwide.
Even with equipment cover in place, you need to do your bit to protect your belongings and take reasonable care to keep them secure along the way. So leaving your work kit on the passenger seat of your car, or in the boot while unattended, or being cavalier with your laptop in a cafe, won’t be looked on particularly favourably when you come to make a claim.
What does business insurance cover?
If your business is based from your home, you’ll want to consider business insurance in addition to buildings and contents insurance. This extra cover will cost you more, but it’s worth knowing that every day, UK insurers action claims of £22 million to firms through business insurance policies, according to the Association of British Insurers (ABI).
Business insurance is an umbrella term for cover for your business that includes:
Public liability insurance
This provides cover for legal costs and compensation claims if your business is held responsible for personal injury to a customer or member of the public, or damage to their property.
Professional indemnity insurance
This helps cover legal costs for defending a claim against your business, and any compensation costs awarded if you’re sued by a customer after providing advice or services they think have negatively affected them. It’s not compulsory, though some professional bodies for solicitors, architects and healthcare professionals, for example, may require their members to have it.
Employers’ liability insurance
If you employ one or more people who work in your home and you’re a limited company, it’s a legal requirement to take out employers’ liability insurance for a minimum cover of £5 million. This gives your business financial protection if employees are ill or injured as a result of working for you.
» COMPARE: Business insurance quotes
Keep your cover up to date
Your home insurance policy should be kept up to date and show an accurate picture of your current circumstances. This includes updating personal details like a change of name or how many people live in your home, reviewing your cover if you’ve bought high-value items or carried out major home renovations, as well as any change in how you use your home.
If your home has become your workplace, telling your insurer will make sure you have the right level of cover in place, and are in the best possible position if you need to make a claim.
» MORE: Home insurance mistakes to avoid
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Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years, with expertise in insurance, wills and probate, and all things health. Read more