Technology has enabled a significant change in work cultures and models driven by the exigencies of our times. Before the pandemic, 20% of the adults in the USA worked remotely. The number went up 71% during the pandemic. More than half of these people have said they will continue to work remotely post-pandemic if given a choice. And organizations may find themselves without much say in this decision. Some recent reports suggest that employees would rather quit than come to work at the office.
Insurance is, of course, applicable for all businesses irrespective of their scale, size, and location. So, what does this mean for the insurance obligations of the companies that employ remote workers?
Many tech start-ups are online setups. Quite often, such businesses do not have a traditional office space. The employees work remotely and use technology to communicate and perform business operations. Apart from the tech sector, remote work is becoming more prominent in other industries across the United States. Even small organizations have found that several functions can be delivered efficiently by employees working from home. Some of these functions include sales, customer service, marketing, retail, accounting, and the list goes on.
And the insurance needs of remote employees vary from that of regular employees. Property insurance, for instance, may not be applicable for remote businesses and employees. Some believe that homeowners’ policies can be applied to businesses in such cases to cover all the insurance requirements. But that may not be true. In fact, such presumptions can cause massive damages to remote employees and businesses.
Considerations and Insurance Types
General and Employer’s Liability Insurance
The insurance type covers the remote business and its employees from numerous claims, such as property damage, bodily injuries, etc. It also covers medical care for any injuries that occurred over the property. Even with remote work, employees are exposed to such risks and issues in the course of performing their daily duties on behalf of the business.
Businesses with remote workforce must cover their remote employees and their activities under general liability and employer’s liability insurance policy. Also, the policy must cover all the regions wherein the employee may be located.
This is one area often ignored when it comes to remote employees or home-based businesses. It’s true that the remote workforce is usually less exposed to property damage losses. However, issues can occur even as the employees work outside of the office premises.
Businesses adopting remote work must ensure that the respective property insurance policies align with the changing exposure of the employees. In many cases, this may include altering the definition of covered property to include the property being used by the workers in the commissioning of their duties.
Cyber Liability Insurance
Cybersecurity is a major concern for organizations across the USA and other parts of the globe. The probability and frequency of these attacks have increased with the implementation of work-from-home and Bring Your Own Devices (BYOD) to work policies. Home networks, devices, and access points are liable to be inconsistently patched, updated, and secured. Network security attacks are major causes of security and privacy violations resulting in data breaches, network eavesdropping, and malware attacks. The lack of knowledge or sensitivity among remote employees is also a major cause for the rise in cybersecurity events.
Third-party cyber liability insurance is crucial to address such concerns. This covers cybersecurity incidents if a client sues the organization over a data breach irrespective of whether the breach occurred remotely. The insurance type covers attorney fees, legal costs, and damages as per the policy limits. Businesses can also enroll in first-part cyber liability insurance. The policy gives protection from the damages the organization can suffer from a security violation.
Small businesses delivering technical tools and systems designed, developed, tested, or implemented by their remote employees may also want to include technical errors and omissions (E&O) insurance. That protects the business from the consequences of technical errors that may arise due to broken workflows or poor work practices caused by the distributed workforce. For example, poor coordination between remote teams may cause an inadequately tested software application to get released, causing work stoppages at a client site. The client may sue the organization for delivering a faulty product/service. The insurance type will cover the resulting damages.
To Sum it Up
The remote workforce and associated hybrid models are gradually emerging as the new normal. As that change sets in, it is essential to become aware of all the applicable insurance policies and norms to always ensure complete protection. In fact, insurance is a basic requirement for businesses towards their clients and employees irrespective of whether the employees work from the office or remotely.