Will home and contents insurance cover working from home?

Working from home has brought us a new range of money matters to consider. What work expenses can we claim as tax deductions? Is it cheaper to commute or stay home? And now, a new riddle: will home and contents insurance still cover us?

Scarily, it turns out the answer could be no – depending on what business you’re doing.

Thankfully, working from home (as in, working for your employer at home) generally will be covered by home insurance, though you should always read the product disclosure statement (PDS) and check with your provider first. 

However, if you’re operating a side hustle from your home (like a small business where you have a registered ABN), you almost certainly won’t be covered – and it’s a huge problem.

Home and contents insurance providers have come under heavy fire recently after this trap was discovered and broadcasted by a Victorian family whose house burned down but couldn’t get their home insurance claim approved because they occasionally sold eggs at their front gate. 

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Other stories have since emerged of people whose claims were rejected or policies voided altogether after their providers discovered they’d been running a business from their house, no matter how small. One couple even had their home policy cancelled because their food truck (which had a separate insurance policy in place) was registered at their home address.

Providers like AAMI and CGU have asserted that conducting business from your home carries an extra level of risk, hence an ordinary policy doesn’t cover it. They have also placed the onus on consumers to be upfront about any business they conduct from their home to ensure they’re receiving the proper coverage.

However, a recent change in regulations means the onus is actually on providers to let customers know what they need to disclose. Customers instead have a duty to be as honest as possible about required information – not to volunteer extra information that wasn’t asked for.

“Insurers do have the right to decide the level of risk they'll cover and how to price that,” says Consumer Action Law Centre chief executive Gerard Brody.

However, Brody argues that misrepresenting the coverage of a policy could entitle customers to a refund “because the policy was effectively junk.” And that’s far worse than even the dreaded scourge of underinsurance. 

“It’s similar to if you set up a lemonade stand for your children outside your house,” says a principal lawyer of Maurice Blackburn, Hayriye Uluca.

“If that’s considered in the insurer’s perspective to be a business and it’s not disclosed and you go on to make a home and contents claim, it’s possible for that insurer to [...] not pay you after a fire, a flood or a storm event.”

“We think that’s completely unacceptable.”

There appears to be little consensus on what providers will classify as ‘high’ or ‘low’ risk business activity, so unfortunately what’s covered will depend on your policy and who provides it. So even if you’re just running a business from your home computer, it’s vital to check with your provider whether your coverage is still valid. 

Here are some proactive steps you can take:

• Compare policies and thoroughly read the PDS. Reading the PDS is an unskippable step, since it lets you know exactly what’s covered and what’s not. If you have any questions, follow up with the provider and compare insurance quotes so you can see which ones offer good value – and which don’t.
  
• Consider business insurance. There are other kinds of insurance for buildings, contents, and cars. Shop around for policies specifically tailored for this so you can maximise your coverage. 
  
• If a disputed claim can’t be resolved with your provider, follow-up with the ACCC or AFCA. If your claim is rejected or policy voided because you fell victim to this particular trap, follow up with your provider’s internal resolution systems first. After that, the ACCC and AFCA have free support available for your next steps.

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