Cedric Stephens | House insurance and remote work

ADVISORY COLUMN: RISKS & INSURANCE

QUESTION: Will working from home affect the insurance coverage on my house? If so, in what ways?

– C.H., Kingston 8

RISKS & INSURANCE: Vernon James heads the Insurance Association of Jamaica, IAJ. His second work hat is CEO and managing director of a life insurance company. That entity is one of many within a group of companies that operates in the Caribbean’s financial services industry.

In marking James’s accession to the IAJ ‘throne’, the company that he heads quoted him in an ad as saying: “Insurance is a nuanced business … during my term … I have committed to making information simple and accessible to those who need it (and) will be providing wide-scale opportunities to make insurance more affordable to Jamaicans."

Was his commitment to making information simple and accessible an explicit promise that all insurers will now start to comply with the provisions of Section 6.0, subclauses 6.1 to 6.17, of the Financial Services Commission’s February 2019 Revised Market Conduct Guidelines during his term as IAJ president? If he succeeds, it will be easier for consumers like you to get answers to their questions much easier in the future.

His comment about making insurance "more affordable" was also intriguing. Was he promising inexpensive insurance coverage to all Jamaican insurance consumers or just to his company’s policyholders?

Mr James’s words stuck in my head as I searched for answers to your questions. While doing so, I learned that work from home, WFH, is now commonplace in the non-life or general insurance industry. Companies are adapting to the new workplace norm in relation to some employees. Also, customers can do some transactions online.

Sadly, I could not see all the policy wordings that I wanted to examine online to answer your questions. Though telecommunication and information technologies have allowed insurance and other industry employees to work remotely from their homes, the house/contents contracts have hardly changed from the pre-online transactions era.

WFH, invariably, is not recognised. Contract wordings are not “characterised by subtle shades of meaning or expression” (one definition of ‘nuanced,’ according to Lexico, an online dictionary), as Mr James claims. Conducting business from one’s home is strictly forbidden.

One of Canada’s leading insurer’s website, for example, makes a sharp distinction between House Insurance and Home-based Business insurance. The page discussing the latter says: “If you work from home, talk to a broker about adding property and liability coverage to your home insurance policy.”

Those words suggest to me that if work-related activities are being conducted at home, they are not automatically covered by house insurance. The conduct of business-related activities may be granted only upon disclosure to the insurer and, possibly, the payment of extra premium.

House in one local policy is defined as “the part of the home which is occupied as a private dwelling”. Home is called “the house together with its garages and outbuildings all used for domestic purposes”. The use of the adjective domestic in the second definition makes clear that the buildings are to be used, according to one source, for residential purposes and not for industrial or office use.

I found the exact question that you posed and the answer to it on the website of a leading United Kingdom insurer.

The site says: “No, if you're an office-based worker and need to work from home because of government advice or because you need to self-isolate, your home insurance cover will not be affected. We already provide cover for office equipment like computers and printers − it comes as standard with our contents insurance.

“There's no need to get in touch with us to let us know you're working from home, so you can just concentrate on setting up the perfect working-from-home space. No commuting, no distractions, and managing your own time – there are lots of positives to working from home. Not to mention the fact that you can be in your comfiest clothes with access to unlimited tea and coffee!

“If you need to see clients at home, this may alter your home insurance cover as additional people coming to your house could be seen as more of an insurance risk, so your home insurance costs may increase. If you are not sure, just give us a call.

“If you are not insured with us, you may need to tell your insurer. If you do not tell them that you work from home and need to make a claim in the future, it may have consequences, so it's always worth checking.”

House insurance practice in Jamaica was founded on UK insurance-market practice.

IAJ estimates, according to information published on its website, that eight out of every 10 houses in Jamaica are uninsured. Those are frightening numbers. Even those few that have insurance are likely not to have the coverage that is needed at this time.

Perhaps Mr James should add commissioning an investigation to learn the reasons most homeowners do not buy insurance to the list of things he has set for himself over the next two years.

In the meantime, may I suggest that you talk to your insurer or broker in order to ensure that you get the protection that you need.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com