July 20, 2022
Work from Home Consultants Need Cover too
Why Consultants Need General Liablity
Why Consultants Need Professional Liability
Other Insurance Coverages to Consider
Why Independent Consultants and Contractors Need Insurance:
Independent Consultants that work from home need insurance. Business Insurance. They need insurance for their business and they need insurance for the owner of the building. The owner of the house is you – the business owner. If you own a business and work from home – get a business insurance policy. It not only protects the business. If you work for a Company, you may be covered by your employer’s policy, but if you work yourself – you may need to pick up your own cover.
The Business Exclusion on a Homeowners Policy:
A very important detail to understand about your personal home policy.
There are many limits to coverage on the typical homeowners policy ISO Form HO0050511 states: Under “E. Coverage E – Personal Liability And Coverage F – Medical Payments To Others it states: “Coverages E and F do not apply to the following:” …”2. Business
a. “Bodily injury” or “property damage” arising out of or in connection with a “business” conducted from an “insured location” or engaged in by an “insured”, whether or not the “business” is owned or operated by an “insured” or employs an “insured”.
This Exclusion E.2. applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the “business”.”
There could be some carve outs to this exclusion including for renting a property and for youths, sometimes. But in general your home insurance policy provides no liability coverage for any “”Bodily injury” or “property damage”…connected to a business at an “insured location” or otherwise. Many policies are different but they often have similar components. [And this is not even all of the coverages that a business would need.]
Please read your own homeowners policy to determine exact lack of coverage.
The Definition of Business according to International Services Office, Inc 2010 Form HO0050511
The below is the defintion of a business as found on one particular homeowners insurance coverage form:
“a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or
b. Any other activity engaged in for money or other compensation, except the following:
(1) One or more activities, not described in (2) through (4) below, for which no “insured” receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;
(2) Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;
(3) Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or
(4) The rendering of home day care services to a relative of an “insured”.”
There are numerous different insurance forms and policies and they are not all the same. [Read your own home policy.]
Why You Really Need these items if you Work from Home:
For many business owners, insurance is not considered until they first go and rent an office space. Within the contract it states the requirement to have what is in essence a general liability/premise liability policy. Often the landlord requires evidence of this coverage before the lease can be finalized. Many of these businesses have been around working for years, but from home. This is rather common with consultants. However the consultant in question in this scenario has already waited too long.
Just because you work from home as a consultant doesn’t mean that you dont need insurance. Frankly you need insurance even more. Think about it this way, simply. If the building owner is requiring you to have an insurance policy – shouldn’t you have a policy for your old business owner? Since you worked form home previously – you were the old business owner. Why didnt you protect yourself?
What type of Insurance Policy should Consultants buy that Work from Home?
Consultants should heavily consider buying a General Liablity policy to start. These GL policies can typically be purchased as part of a Business Owners Policy that also includes some limited coverage for business personal property. Business personal property may just include your computers, printers, and other articles that are owned and used by the business.
A common consultant BOP might include $1,000,000 in liability coverage and $25,000 in business personal property.
Next – a home consultant might also consider a Professional Liability Policy. Frankly the Professional and General Liablity policy are often purchased together, hand in hand. The distinction between PL and GL is often quite minor.
Types of Work from Home Business Insurance Policies to Consider:
Business Owners Policy – these policies typically combine General Liablity and Business Property.
Professional Liability – also known as Errors and Ommissions – this helps protects you for errors in your professional duties.
Business Auto Policy – Auto coverage for your business auto. Many business owners have a business exposure here and just don’t know it.
Workers Comp – do you have employees? You might need workers comp.
Cyber – do you have any exposure online, you might want to consider a cyber insurance policy.
Commercial Umbrella – not a personal umbrella, but a commercial umbrella. Distinct and Different.
Employers Practicies Liability – getting sued for your hiring practices? EPLI could come into play here.
Media Liability – a rarer from of insurance, but media liability is something you want when using professional images and other media material.
Directors and Officers Coverage – Sit on a Board or Make decisions? These unusual policies cover these directors and officers for their decisions or lack there of.
And More – this is not at all intended to be a comprehensive list.
Note on Independent Consultants and Their Need for Insurance:
Always seek the licensed counsol of an insurance agent in your jurisdiction when thinking about insurance. If you are buying, changing, cancelling, etc – get some free help. Its complicated – try not to do it alone.
