What is the best insurance for designers working from home?
This week we received 10 emails in three days after the ABC reported insurance company AAMI refused house and contents insurance for a home business. ABC actually ran two stories, both had ramifications for designers who work from home (even some of the time).
So we did some research…
First thing to note is we’re addressing home and contents insurance. There are many other types of insurance relevant to a designers working from home — contents insurance is just one.
The second disclaimer is to be aware insurers differentiate between a design business owner working from home and an employee working from home for an employer. Yep, there’s a large grey area inbetween. It’s (like they say in the movies) complicated.
Home and contents insurance vs business insurance
Here’s the thing: traditional home and contents insurance was never designed to cover business risks. House and contents insurance was written to cover private goods and chattels. Times have changed but some insurers are still sticking by those rules. In fact, CGU have been quoted as saying they would void a house and contents policy even if the business was simply registered at the home address – even if no business was performed at that address.
That said, each insurer approaches things different, and many have updated their thinking since the 2019 Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Commission resulted in a shift of the burden of disclosure from the insured to the insurer.
We no longer need to know what to declare – instead, our duty is to take reasonable care not to make a misrepresentation to an insurer. The burden is on the insurer to ask the right questions, that is elicit the information needed in order to assess whether to accept the risk and at what price.
The question on everyone’s lips is does a designer need business insurance if they already have home and contents insurance?
The answer is yes. Regular home and contents insurance covers stuff like your computer and furniture. It won’t cover injuries to clients visiting your property, problems with the service you provide to clients or losses or legal expenses from a privacy breach if you get hacked. Businesses need many different types of insurance, covered (blatant plug here) in our How bad can it get? Risk management for creatives ebook. Spend $30 to read about the gamit of insurance available to creative businesses and why (we think) some are not worth the paper they’re written on.
Does home and Contents insurance cover your home office chattels?
Maybe. Advice from the Insurance Council of Australia is there are many insurers offering many home and contents insurance policies, and each one uses different underwriting criteria.
The general counsel seems to be if you are a designer working at home for your employer, you are probably safe; however if you are a designer with an ABN registered to your address, best to contact your insurer or check your policy documents.
Philippa Heir, managing lawyer at the Consumer Action Law Centre, has been quoted as saying those working from home offices — even if it’s your own business — are probably fine. “Insurers generally have moved with the times in terms of people working from home,” she said. But she also warned that “each insurer approaches these sorts of things differently” and consumers should always check with their company.
Similarly, Hayriye Uluca, a principal lawyer at Maurice Blackburn Lawyers said “Every insurer differs in terms of the products they offer and the risk they’re prepared to take on.”
So the general consensus is read your policy.
Employees working remotely
Many home and contents insurance policy’s cover items up to a value of $10,000 – that’s usually enough cover for a laptop and large monitor. Over that, items can still be covered, but often they need to be listed separately. That means a majority of employees working remotely probably don’t need further coverage.
It’s important to note, design studio owners with employees working from home are still responsible for their employees safe work environment. That means heating and cooling; a safe, ergonomic chair; a solid, stable desk and a monitor appropriate for their line of work. And often it includes a laptop so they can work seamlessly between home and your team meetings.
That’s where it can get a little messy. Many studios have general property insurance covering business equipment (like mobiles, laptops, iPads, etc.) regardless of where they’re used.
But … insurance has many buts:
- the equipment often has an upper limit of value. It varies from policy to policy but sometimes items of high monetary value must be specified on the policy for it to be insured
- employees must insure their own property. Property of an employee will not usually be covered by an employer’s business insurance, and that’s important if employees use their own laptop because…
- if an employee is using their own laptop and information is lost (for example, because of hacking or a computer virus), the loss would not typically be covered by your business insurance or their home and contents insurance.
Sole operators or employers working from home
Advice from every angle says designers should brief their broker/insurer well and read the policy. The reality is each insurer assesses risk differently and insurers do not like surprises.
Take away
A few points.
The big picture: the Haynes Royal Commission outcome was a positive outcome for designers. Insurers have a new duty to offer a simpler application process for customers. That equates to work for many design practitioners, including graphic, UX, UI, information architects, interface and web designers. Their skill is needed to help translate complex policies into easier to read, more palatable information.
The logic: many insurers – like AON – offer business insurance specifically to cover (in part) a business’s assets in the event they’re damaged by a story, fire or other insured event. It makes sense then, that a ‘traditional’ house and contents insurance offer the same coverage.
The advice: always err on the side of caution:
- notify your insurer (in writing) you are working from home, even if it is only on a part time basis. And ask for confirmation they received the information
- assume your standard Home and Contents policy does not provide sufficient cover and be ready to itemise equipment of high monetary value.
The bottom line is like many things, it’s about managing expectations.
If it all turns pear shaped: If your home insurance claim has been rejected by your insurer the first step is to lodge an internal complaint with the company. Specifically ask for the complaint to be registered as a dispute and ask for the dispute number. The company is required to respond within 30 days.
If you’re unsatisfied with their response or they don’t respond in that time frame, you may want to look at lodging a complaint with the Australian Financial Complaints Authority.
Got a comment/question? As always, happy to discuss further, just email.
References used to write this article:
https://www.abc.net.au/news/2022-07-20/side-businesses-voiding-home-insurance-widespread/101246862
https://www.steadfast.com.au/well-covered/insurance-for-growing-business/what-you-need-to-know-about-employees-working-from-home
https://business-insurance.aon.com.au/business-insurance
https://www.comparethemarket.com.au/business-insurance/industry/home-based-business/
https://www.gio.com.au/know-more/insuring-your-home/will-my-home-office-be-covered.html
https://www.abc.net.au/news/2022-07-20/side-businesses-voiding-home-insurance-widespread/101246862
https://insurancecouncil.com.au/issues-in-focus/hayne-royal-commission/
Carol Mackay
Co-founder Design Business Council.
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About Carol Mackay
After 30+ years running a graphic design firm, Carol pivoted from client-focused projects to consult to the design industry.
Carol’s special power has always been an ability to use design to translate difficult to understand or complex messages. She believes design brings clarity to complex issues. From clarity comes understanding, and understanding leads to knowledge.
As a designer she used those skills with clients like The Magistrates, County and Supreme Courts; Ombudsman schemes and Emergency Service agencies. At DBC she uses the same skills … she helps designers de-mystify the complexities of managing a small business.
Outside of DBC Carol mentors graduates and is a Board member at Never Not Creative, a community of creatives pushing for change in the creative industry.
