Since the start of the pandemic, working from home has become the norm for millions, but is the home insurance industry still playing catch-up?
Lawyer Dean Dunham, who presents the Consumer Hour on national radio station LBC, has tweeted that some household insurance claims have been rejected, seemingly because policyholders failed to disclose to their insurer they were working from home.
How home working can impact home insurance
He believes there is a need for greater industry transparency. “After COVID-19, it appears inevitable that more and more people will work from home on a full or part-time basis,” says Dunham.
“Providers need to publish clear terms and guidance on what types of work impact a home insurance policy; just saying that admin or clerical work does not need to be notified does not go far enough.
“We have been assured policyholders do not need to notify insurers if they are simply carrying out an admin role at home, but there is no definition of ‘admin’, which leaves room for interpretation and therefore for insurance providers to deny claims.”
This could present a big problem. In July, the Office for National Statistics published a report on home working showing almost 47 per cent of people in employment spent at least some time working at home during April. Some 86 per cent of these people did so because of COVID-19, and the current second national lockdown in England and elsewhere is seeing this happen again.
Guidance from the Association of British Insurers confirms office-based workers who are remote working as a result of the pandemic do not need to update documents or extend cover.
However, Dunham advises those who are running a business from home or receiving visitors at home in a business capacity should notify their provider and ask for written confirmation that their policy will not be affected.
Bosses have a duty of care to remote workers
This is not just an issue for employees. Where does it leave employers when it comes to insurance and working from home, for example with risks such as cybercrime, data theft or loss, and professional liability and indemnity?
Ben Mason, employment law partner at Aaron & Partners, explains: “Employers have a duty of care towards their workforce, and their responsibilities towards home workers in terms of protecting their health and safety are the same regardless of whether they are working from home or in the workplace.
“Ideally, employers should carry out a risk assessment of their employees’ workspaces to ensure they are adequate and safe. Employers should check they have a remote-working policy and existing employers’ liability insurance policies should be reviewed to ensure they cover home-working and that cover is adequate.
“Without the necessary insurance cover in place, employers could be found liable in the event an employee is injured during the course of their work at home.”
The potential for such risks with home working has led to some challengers in business insurance doing things differently.
Ben Rose, co-founder and chief underwriting officer at Superscript, says the company provides automatic cover for employees anywhere in the UK, including when they work from home, as well as cover for computer equipment anywhere in the country, including at employees’ homes, as standard.
He says: “It’s unlikely company-owned property will be covered by an employees’ home insurance. It’s vital employers check sums insured, particularly if you have purchased additional equipment for people working from home.”
Cyber threats to personal details also key
Home insurance may focus on buildings cover, personal possessions and accidental damage, but when it comes to insurance and working from home, the risk of cybercrime is also important to consider.
A survey of 2,500 UK employees from insurance broker and risk adviser Marsh Commercial found more than a third (38 per cent) had not received any communication from their employer on the additional cybersecurity risks of working from home.
Sabine VanderLinden, formerly founder of InsurTech, an insurance accelerator, agrees this poses a risk. Now managing partner of the Alchemy Crew, a new venture validation firm for the insurance and financial services sectors, she says: “As the pandemic becomes a trigger for more permanent change, it is likely insurers will see this as a catalyst to design, build and deliver new insurance products.
“Many employers will have to talk to their insurer to ensure their policies are extended to their employees’ home offices.
“They also need to sign up for remote-working digital cyberattack protections to wipe laptops clean in case of a breach and have to work directly with their insurers to map, visualise and assess the likelihood of total losses, to be able to estimate the aggregate financial value of future remote-working claims beyond agreed deductibles.
“One other emerging area receiving high interest is mental health insurance, particularly for lone workers with no remote supervision.”
VanderLinden predicts we may now see further growth in on-demand and usage-based insurance, which she says is “gradually becoming the way to mitigate risk for some smaller business markets”.
Janthana Kaenprakhamroy, founder and chief executive of insurance startup Tapoly, also sees COVID-19 as ushering in a new era for insurers concerning remote working.
“Existing packages were not created with the current situation in mind, so insurance needs to adapt to ensure it is fit for purpose and does not leave people working from home exposed unwittingly,” she says.