Employees Working from Home: Insurance Considerations for Your Small-Business Employers

Home OfficeHaving employees working from home isn’t new. However, the COVID-19 pandemic that drove the widespread switch from employees doing in-office work to working remotely has propelled some businesses into making a permanent shift. In fact, recent research conducted by the Society for Human Resources Management showed that nearly 17% of the human resources leaders in over 2,284 U.S. businesses said that their company is planning to implement permanent work-from-home policies for their employees. About 10% of the respondents surveyed were people working at large enterprises, and 60% were at small businesses.

However, the increase in working from home is presenting opportunities as well as problems for employers. As an insurance agent, you likely have small-business clients that have or may be considering allowing some or even all of their employees to work from home. The following are insurance coverage considerations that should be discussed with your business clients as they relate to the growing remote workforce.

Employers’ liability insurance

Employers are responsible for providing employees with a safe work environment — both on- and off-site. A business’ liability insurance will typically provide coverage for bodily injury claims by workers who are not covered under a workers’ compensation policy. However, coverage for claims typically depends on two factors: where the injury occurred, and what the employee was doing at the time of the injury. For employees working remotely, this can be a challenge.

The definition of a covered worker under an employers’ liability policy should include “workers to whom the company or its additional insureds may be found liable for workplace injuries.” A liability policy’s coverage territory also should provide coverage for loss or injury wherever workers are located.

Workers’ compensation insurance

According to the Occupational Safety and Health Administration, small-business owners are responsible for providing their employees with a safe work environment, and all home-based workers have the same workers’ compensation benefits as in-office employees. In general, a WC policy will provide coverage for an employee if he or she is injured during business hours while working remotely. However, working from home can create unique WC risks that can include:

  • Cumulative physical injuries stemming from an ergonomically incorrect home office space and leading to back pain or carpal tunnel syndrome.
  • Workspace-related injuries caused by the use of makeshift offices and awkwardly shared spaces in the home.
  • Fatigue-related injuries caused by employees who are unable to adhere to a regular workday schedule. In these cases, employees are putting in more hours than usual, which can lead to unsafe work practices. In fact, since COVID-19, workers have been on their computers/laptops for an additional three hours a day, a 40% rise compared to before March 11.
  • Mental health issues caused by an overwhelming feeling of always being “on and at work” while at home. In fact, a recent survey showed that 51% of respondents admitted experiencing burnout while working from home during the pandemic and failing to practice necessary self-care.

These emerging WC risks will require insureds to evaluate their exposures and review the specific terms and limits of their WC coverage. You can learn more about WC claims and COVID-19 in our blog titled Is COVID-19 a Compensable Workers’ Compensation Disease?

Property insurance

Property insurance typically covers locations that a company either rents or owns and the business personal property within those locations. In remote work situations, property typically consists of equipment such as mobile phones, computers and other electronic devices. However, it may exclude or limit coverage for property located outside specified covered locations, even if the company owns that property. Companies transitioning employees to permanent remote work should evaluate whether their property policy terms will provide coverage for electronic equipment and the valuable data stored on systems and devices. Learn more about cybersecurity and the risks of employees working remotely in our recent blog titled Cybersecurity and Working Remotely: Are Your Business Clients at Risk?

Directors and officers insurance

A shift to employees working remotely can indirectly lead to claims against the business’ directors or officers due to failures caused by mismanagement. This can include a failure to properly execute certain policies and procedures as well as alleged wrongful acts relating to remote operations or network security. Some D&O policies will also respond to claims for certain cybersecurity risks, such as claims by shareholders that managers allegedly were negligent in taking the necessary steps to protect the company and its customers.


Employers need to be particularly sensitive to the fact that claims stemming from work-from-home situations can be difficult to disprove. And while most of the claims are legitimate, business owners need to be proactive in implementing risk-mitigation strategies for employees working remotely to minimize the potential for claims and to mitigate losses.

About FastrackCE

Ensuring continuity in business in the midst of a crisis situation such as the COVID-19 pandemic is vital. At FastrackCE, we make it easy for insurance professionals like you to maintain current continuing education licensing requirements so you can focus on serving your clients. When you need us, we can help. For more information, call 800-544-3605 or visit us at fastrackce.com.

Disclaimer: Every insurance contract must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage will vary depending on the jurisdiction and circumstances. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional.

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