The Home-Based Business – What Risks Are Lurking in Your Corner?

The social work profession is truly noble, founded on service, integrity, and clinical expertise. However, it can also be stressful and even dangerous at times. The nation is grateful for what you do, and so are we. Thank you!

Social and technological changes are reshaping the way we work, with more and more activities moving into the home. As stated by WebCE, owned by the International Risk Management Institute (IRMI), the major reasons for this trend include:

1. Downsizing by employers, which alienates employees from wanting to work for any employer again.
2. Outsourcing work to home-based workers, contractors, and consultants.
3. Telecommuting and online work, which make working remotely easier and more productive.
4. Service industries selling services rather than products, which can be established from home with very little capitalization.
5. Family values being prioritized above the worker’s professional life.
6. Financial pressures that result in creating additional income-generating enterprises.
7. Loss of job security, where employees are treated as disposable commodities.
8. The COVID-19 pandemic creating a new paradigm shift from the traditional workplace

Home-based businesses account for over 50% of the small business population, tend to be sole proprietorships, and make up 10% of all U.S. households operating some form of full- or part-time business (Ibid).

(Source: Study conducted by the Independent Insurance Agents & Brokers of America, Inc. (IIABA) See the following 6-step checklist.)

As published by IRMI, here is a simple checklist to help you identify your business risks as a social worker or health care provider:

1. Is your business a business or a hobby? We assume your practice is a business.
2. List your business activities. For example: Do you conduct therapy in your home office, in a public venue, in a rented facility, and/or online or over the telephone? Do you travel across state lines to conduct therapy?
3. Identify all business risk exposures. Liability exposure is the most important and typically includes malpractice, negligence, and legal defense needs arising from divorce litigation, licensing board complaints, depositions, subpoenas for records, third-party cyber liability exposure, and various general liability matters such as slip-and-fall incidents, dog bites, patient injuries during professional services, and third-party property damage during services.
4. Identify the risk exposures your homeowner’s policy covers—and which risks are “eligible.” A homeowner’s policy does not cover many business-related risks.
5. Identify the risk exposures you are not covered for. Points 4 and 5 are critical. You must reconcile your business activities with your homeowner’s policy to identify gaps.
6. Determine the additional coverage you need for your business. In most cases, you will need a Professional Liability Insurance (PLI) policy, as virtually all states require one to obtain a license to practice social work. A PLI policy is also wise if you work in any health care-related field, regardless of licensing requirements. General Liability Insurance is recommended—especially if you provide services outside your home office. Many homeowner’s policies exclude business-related risks and/or have low sub-limits and high deductibles. They do not cover therapy provided in rented facilities or public venues. Homeowner’s policies also lack cyber liability coverage and coverage for HIPAA HiTech third-party risks under 45 CFR Part 160, which can hold a social worker criminally and civilly liable for a client records breach.

A homeowner’s policy with a small business endorsement may include products and personal property contents coverage, as well as dwelling coverage. However, as a service provider, property coverage is typically not a critical factor in your risk exposure assessment.