The coronavirus pandemic and related government lockdowns have moved many workplaces into their own houses, with Statistics Canada reporting in May 2020 that approximately four in 10 Canadian workers have jobs that can be carried out from home in light of the crisis. However, there are key exposures that business owners in particular have to consider if they’re relocating their operations to a home office, either temporarily or over the longer-term.
“Most business owners assume that if they are working out of their home, the homeowners’ policy would protect them against any business losses. This is not the case,” said Wendy McCormack, senior underwriter in personal lines at Burns & Wilcox Canada. “When the clients originally purchased their home insurance, they worked outside of the home. Now, due to the pandemic, the work situation has changed and the home is no longer just a personal space.”
Because the use of the ‘home’ dwelling has changed for some businesses, the insurance coverage must change as well, or the insured risks ending up in a situation where losses are denied due to having the incorrect coverage.
After all, noted McCormack, “Working from home doesn’t just change the location of the business – it changes the liability exposures. It could also mean that products and business equipment are now located in the home, so business owners need to review their situation and their insurance coverages to accommodate this change.”
Some questions for insureds and their brokers to consider include whether the business owner has clients visiting their home, which in turn increases exposure to slip and fall losses due to more foot traffic. They also need to consider if their computers are owned by the business or the insured personally, and what exposures are excluded under their policy.
“Most homeowners’ policies usually allow for an office in the home, meaning there are no clients visiting the home, no signage on the lawn, and no equipment or products on the premises,” explained McCormack. “The purpose of a personal homeowner’s policy is to protect the named insured, the home, and the contents. It includes personal liability, but it is not meant to cover a business.”
The homeowner’s policy may in fact have exclusions for business property and business activity, and may also list an exclusion regarding the building or dwelling being used for the business. McCormack recommends that, because each insurance company has their own property wordings, insureds, with the help of their brokers, review the specifics of their policies. On the other hand, commercial insurance provides business property and commercial general liability, but it does not include personal liability or additional living expenses. Commercial policies usually cover buildings, storefronts, warehouses, and their contents, and may only include premises liability.
With all of the other financial pressures that business owners may be facing today, they can at least make sure to avoid uninsured losses when it comes to their coverage, if they have moved to a ‘work from home’ environment.
“The whole purpose of having insurance is to protect the insured against losses. Reviewing the client’s situation and providing them with the correct coverage could prevent losses from being denied,” said the Burns & Wilcox Canada expert. “The business owners should be aware of the coverage limitations and exclusions, so they may better understand how the coverage could affect their business.”
To help insureds operating under these circumstances, Burns & Wilcox Canada offers both personal lines homeowners’ coverage and commercial lines coverage, and can review each situation individually to determine which coverage best suits the individual and their business.
