A couple months into the widespread shift to remote work for many employees on a temporary basis, an increasing number of companies are considering or already implementing a permanent shift to remote work for most or all of their employees. Unsurprisingly, this shift is rapidly occurring in the technology industry. For example, Twitter’s CEO announced this week that its employees will be allowed to work from home permanently. But it is also occurring across other industries, including the insurance industry. For example, Nationwide is planning to permanently exit its building space, other than four main campuses, before the end of the year and is moving its other employees to permanent remote-working status.
Such a shift to long-term remote work impacts a company’s risk exposures in a variety of areas and in ways that affect many of the company’s insurance programs. Any company considering permitting or requiring its employees to work remotely as a long-term strategy should have its policies reviewed carefully by professionals—brokers and experienced coverage counsel—to identify potential gaps or changes in coverage or policy language that should be addressed. Issues that may arise under common commercial policies include:
- Cyber Insurance: As we wrote last week, the abrupt switch to work from home has made companies more vulnerable to hacks and social engineering schemes. The longer employees work from home, the more time they have to adapt to different channels of communication and the more time IT personnel have to shore up security in remote working environments. That said, there is more vulnerability inherent in a dispersed network operating on home systems than a centralized network in offices, so companies transitioning to remote work should make sure their cyber coverage meets those risks.
- Commercial Crime Insurance: Commercial crime insurance often provides coverage for losses that dovetail or overlap with dedicated cyber insurance, such as coverage for funds transfer fraud or computer fraud. However, commercial crime policy terms do not always apply to electronic processes or systems in the ways that insureds might expect. Disputes have arisen where, for example, the policy covers the fraudulent transfer of money by the use of a computer and the insured was targeted by an email scam, with coverage denied because the scam did not “only” involve a computer. We have also seen disputes arise under commercial crime policies due to the insured’s use of third-party online payment systems.
- General and Employers’ Liability Insurance: Coverage for injury to workers often turns on the categorization of the worker (e.g., employee or independent contractor), where the injury occurred, or the activity the worker is engaged in at the time of injury. These lines can become more blurred for remote workers. Companies with remote workforces should ensure that the definition of covered workers under their employers’ liability policy encompasses all workers to whom the company or its additional insureds may be found liable. They should also make sure that the coverage territory includes everywhere their workers may be located. If, for example, a policy only covers injury in the U.S., Canada and Mexico (which is fairly common), there may be a coverage issue if a remote employee is injured while working outside of those countries for any extended period of time.
- Property Insurance: COVID-19 has brought many issues relating to property insurance into the spotlight. Details in property policy terms can mean the difference between a covered and an uncovered claim. And while companies transitioning to a remote workforce may have less exposure to property damage loss, the pandemic has highlighted the importance of also having coverage for business interruption losses. Companies transitioning to remote workforces should make sure that their property policies align with their changing exposures. For example, many property coverages are tied to insured locations. Companies should also make sure that property being used by workers at remote locations falls within definitions of covered property.
While remote work has been gaining traction for years, for many companies it is quickly becoming the “new normal.” Make sure your insurance adjusts to the differences, or cost offsets could quickly get reduced by uncovered losses.