A lesson learnt in recent years is that certain businesses can operate completely remotely without the need for an office. Technology is such that communication and collaboration with colleagues and clients is seamless. Some businesses are even questioning the expense involved in running a physical office, in effect becoming a virtual business. I would like to explore some of the insurance implications of a virtual business, good and bad.
Insurance implications for virtual businesses
In my opinion, when it comes to insurance for virtual businesses, the insurance industry has been a bit slow on the uptake. A standard “office” insurance package is usually intended for traditional businesses that operate from a specific premises. As a result cover for remote workers can be low to non-existent. A standard “home worker” policy is generally intended for a limited number of owners/directors. Again, this is normally specific to a specified risk location.
Neither of these insurance packages really apply to a virtual business, with no physical premises and 100% remote workers.
An ideal insurance scenario
I think that the ideal scenario would be cover for the general public and employers’ liability risk and the physical assets of the business anywhere in the UK (or even further afield). From an insurer’s point of view there is probably a greater employers liability exposure. This could include less control over Health and Safety and associated risk assessments. However, there could be less exposure in respect of business interruption as the workforce is spread over multiple locations.
Besides the cover for physical assets and general liability, virtual businesses may have to consider a possibly higher professional indemnity and cyber liability exposure.
