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How to adjust your insurance when you work from home
You can save a lot of money on car insurance when your commute is five steps rather than 50 miles.
A growing number of Americans are working from home, using technology to connect to co-workers and offices. In addition to flexibility and not having to hear annoying chatter in a cubicle next to you, You likely qualify for better car insurance rates due to your reduction in annual mileage. That’s because if you are spending less time behind the wheel, you have a lower chance of crashing. Contact your agent if you’ve reduced or eliminated your work commute.
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Most insurers offer a low-mileage rate, says Chris Hackett, director of personal lines policy at the Property Casualty Insurers Association of America, an industry trade group. "That would typically be for someone who drives less than 7,500 miles annually. It definitely makes a difference. For most folks it would be a noticeable difference."
When he began working from home, Ron Moore, senior product manager for MetLife Auto & Home, saw his own car insurance rates drop. "It's definitely worth talking to insurance companies about," he says. "When I was working in the office, I was commuting 40 miles one way. When I started working at home I saved probably 15 percent on auto insurance. The savings will vary depending on how far people drive."
Asking for home insurance discounts
Amy Bach, executive director of United Policyholders, a consumer-advocacy group, says it's not likely that your home insurance company will give you a discount simply for working home, even though spending more time at your residence may reduce the chances of burglaries, fires and other mishaps.
"They don't offer a housewives' discount for people who don't work at all," she notes. "Though having someone on the premises makes it less likely a home will be burglarized, it has no impact on sudden and accidental events that have no relation to a person being there or not – say, a burst pipe or a tree falling on a roof. Yes the damage will be cleaned up faster and perhaps be less severe if someone's there right away to tend to it, but I doubt an insurance underwriter would deem it a significant enough factor to impact a rating plan."
Moore agrees that most insurers are unlikely to give reduced rates to homeowners simply for working at home. Even so, it is worth a call to your agent to make sure you’re not missing out on a potential discount.
As the number of home-based workers rises, the insurance pricing may change, Moore adds. "The insurance industry doesn't move fast. My expectation is we will see that in the marketplace in the future."
Additional insurance you may need
While working home from can decrease insurance costs, there are also times when you may need to expand your home insurance coverage and pay more.
If you no longer commute to work, your car insurance cost might drop, but don’t assume that your standard auto policy will cover accidents you have while driving for your home-based job, says Moore. If your home business requires you to drive around clients or employees, a personal auto insurance policy is probably not adequate. You may need to shell out for a commercial auto policy.
In addition, a typical home insurance policy won't cover visits by clients, employees or the storage of goods, says Hackett. Most insurers "will not have problem in with an incidental office space at your home with a computer, printer and phone,” he explains. But if you’re adding “risk exposure” with a lot of foot traffic, or you have a sign on your home advertising your business, you may need a commercial business policy.
Some people who run home businesses buy additional liability coverage to protect them from lawsuits, says Loretta Worters, a spokesperson for the Insurance Information Institute.
"A standard homeowner policy does not provide for business liability or business interruption. Those are standard forms of protection if you have a customer injured on your property, or let's say you have a fire in your house," she says.
Worters says supplemental insurance is available to protect expensive office equipment. "You can have a homeowner policy endorsement rider on your existing policy that typically doubles the amount for business equipment, such as computers," she says. The cost will vary, depending on your needs and your insurance company.
The average home-business policy costs $250 to $500 above a typical home insurance policy, says Worters.
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