With Covid-19 resulting in a surge in the number of people working from home, Bobbi Sills assesses the insurance implications
When the Covid-19 pandemic struck earlier this year, it sparked a homeworking boom that transported office working to kitchens and spare rooms across the UK.
Thousands of businesses were left scrabbling to switch to a 'new normal' of remote working. But despite the easing of lockdown, working from home is still high on the agenda for many, as questions are raised about the value of the office in the post-Covid-19 era.
Almost half of UK firms have mandated homeworking during the pandemic, according to the Office
for National Statistics.
Agile working certainly provides greater flexibility for employees, but what are the implications for home insurance and does a standard home policy provide sufficient cover for homeworkers?
FLEXIBLE APPROACH
In response to the outbreak, the Financial Conduct Authority (FCA) said: "We expect motor and home insurers not to reject claims because of a consumer's understandable temporary change in how they use their vehicle and their home address."
The UK's financial regulator stated that it expects home insurers to cover policyholders even though their risk profile had changed, but added that customers would have to amend their cover once lockdown was lifted.
Homeworking can result in increased theft or liability risk at a property if the policyholder is storing expensive equipment, or if there are regular visitors to the property.
Sue McCall, chair of the CII's Society of Claims Professionals, says: "We would expect the insurance profession to respond to the new normal by revising policy wordings as standard to incorporate the additional cover required under a home contents policy and a commercial policy."
Insurance giants Aviva, Admiral and LV= have committed to a flexible approach towards helping customers who need to work from home but whose home contents policies do not ordinarily cover additional equipment.
A spokesperson from Aviva says: "To help customers during this time, from 20 March 2020 until further notice, we are treating home office equipment as 'contents' under all our home products and we'd pay up to the contents sum insured for any valid claim."
While insurers waived the need to notify them of working from home during lockdown, customers who are planning to work from home more regularly, such as once or twice a week, may still need to take action depending on who their insurer is, according to the Association of British Insurers (ABI).
Ms McCall says: "Some home contents policies cover administration duties as standard, while others exclude items used for 'business or professional purposes'."
Ms McCall notes that the onus should be on employers to ensure suitable cover for their own equipment, even if the equipment is being stored in an employee's home.
In most instances, employers will cover the costs of their equipment once it leaves the office.
Ms McCall highlights that equipment is not typically covered under home insurance policies unless the individual is responsible for damage to the equipment under the terms of employment.
Ms McCall says: "Employers should look at their commercial insurance policies, to establish whether cover is broad enough to extend to phones, laptops and portable computer equipment while away from the business address.
"This cover is not provided within most standard commercial wordings and is subject to additional premium."
If a policyholder has bought their own new furniture or equipment for working from home, they do not need to inform their insurer; however they may have to increase their contents cover limit if the cost of the possessions will now exceed it.
The ABI further states that if customers undertake any non-clerical tasks at home, they should contact their insurer for guidance.
CLAIMS PERSPECTIVE
Remote working also puts policyholders in a better position to save money on certain types of household claim, according to Helen Idle, head of household claims at AXA.
Ms Idle notes that escape-of-water claims have historically been a key focus for insurance firms, which have sought to reduce the damage and cost of these claims to the customer.
Ms Idle says: "We are starting to see the frequency of these claims increase but the severity -- and in turn, the cost -- is not. This may be down to the fact that as people are at home, they're able to identify leaks quicker and stop the damage getting worse and adding to the claim costs."
Ms Idle points out that AXA saw a decline in the total number of household claims, including accidental damage claims, at the height of the lockdown in April.
But home insurance customers who are planning to work from home for a prolonged period should be aware of the increase in likelihood of accidental damage or theft, which may result in an increase in their premiums.
As the Covid-19 crisis continues to reshape the world of work, insurers must be aware that a shift in premiums and liability for home insurance customers may well be on the horizon.
Bobbi Sills is communications executive of the CII