BALTIMORE – Insurance Commissioner Al Redmer, Jr. advises Marylanders that have a home-based business or who telecommute to their job to review their insurance coverage to ensure that it is adequate for their business needs. Because both telecommuting and maintaining a home-based business carry their own unique risks, Maryland consumers engaged in these activities should contact their insurance producer or company and obtain the appropriate information to ensure that their coverage will protect them in the event of a loss.
“Telecommuting and operating a home-based business are much more commonplace and it’s important for Marylanders to have proper insurance coverage in these instances,” said Commissioner Redmer. “If you are depending on your renters or homeowners policy to protect your business or business related liability incidents, you might be surprised to learn there are limitations to what a renters or homeowners policy will cover.”
Risks Associated with Telecommuting
Many employers have embraced the benefits of working from home as they compete to attract and retain quality employees and provide a satisfying work-life balance. Telecommuting may not, however, be as simple as having a cell phone, a laptop and high-speed Internet. Concerns about cyberattacks add an additional layer of potential liability for the home-based employee. Verify that your employer has installed on your home computer the software necessary to protect the employer’s data. Be mindful, as well, of your own responsibility to protect company information.
Telecommuters face similar risk factors as those faced by employees in the office with regard to work-related injuries and safety issues. It is important that you verify that your employer's workers' compensation policy will provide the same coverage for injuries suffered in your home office as is provided in the business workplace.
Risks Associated with Operating a Home-Based Business
If you operate a business from your home, you also have unique insurance considerations concerns. Some of these considerations are:
- Do you keep business-related stock or inventory in your home?
- Do you have specialized or difficult-to-replace equipment? Many renters or homeowners policies limit coverage for office equipment replacement. Would your applicable limit cover a loss of the equipment you need to keep your business running?
- Do clients or customers visit your home office? If so, are you protected against possible lawsuits if a business visitor were to be injured on your premises?
- If your home office were damaged or destroyed by a flood or fire, would you be compensated for the lost income?
These are just a few of the questions you should discuss with your insurance producer or company representative. Coverage for business-related property losses or liability exposure is typically excluded from a traditional homeowners policy. You may need to purchase a business-related endorsement or a separate in-home business policy or business owner’s policy in order to be fully protected.
Tips and Considerations for Reducing Business Risk
As a small business owner, you can take steps to minimize risk in the workplace, thereby helping to lower your insurance premiums. Here are some tips that could benefit your business, employees, customers and clients:
- Install fire and security alarms.
- Plan for and train employees to deal with emergencies on the premises, such as fires and evacuations.
- Have employees keep wallets and other personal items in a secure place. Keep the business’ cash and other valuables in a fire/waterproof safe.
- Provide recommended safety gear for those employees who must work with machinery.
- Keep office space in good physical condition. Maintain carpeting and railings on stairs. Make sure telephone and computer wiring is in good working condition and does not create any hazards.
- If your employees operate company cars, ensure they have clean driving records and proper training. Consider performing background checks of employees who may handle money prior to hiring and ensure timely compliance by all personnel with any applicable state or federal licensing requirements.
Tips and Considerations for Lowering Property and Liability Insurance Costs
- Review all insurance policies yearly, and note any changes that may affect your coverage costs. For example, your premiums could be impacted by increasing or decreasing the number of employees, product offerings or inventory; alterations to your building or equipment; or changes to state regulations.
- Find out how plans differ to ensure you purchase the best policy for your particular business at the best available price.
- Determine whether you can claim a tax deduction for your premiums on fire, casualty and/or burglary insurance.
- Review your policies to ensure that you are not purchasing overlapping or duplicative policies. Careful examination of your policies also helps to ensure that you are not missing crucial coverage in other areas.
Have a Conversation
Contact your insurance agent or company representative, ask questions, and check your coverage to see if there are gaps. A failure to disclose to your insurance company that you are running a business out of your home may result in there being no coverage for a business-related claim, or a your policy may be non-renewed. Determine whether professional liability or errors & omissions (E&O) insurance is either required or recommended in your particular line of business. Don't let the fruits of your hard work be lost to an accident or oversight. Have a conversation and make sure you are properly insured.
For more information, check out Insure U's Home-Based Business page, Insure U's Job Change resources, or contact the Maryland Insurance Administration.
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