Endorsements & LiabilityQuestion 97 of 158
An insured runs a small in-home tutoring business out of her residence. Which statement is MOST accurate about the homeowners liability for this exposure?
a.Only a commercial general liability policy can ever cover any home-based business activity
b.The base HO-3 Coverage E will automatically cover any business-related lawsuit
c.Homeowners policies in California are required to include unlimited business liability
d.Business liability is largely excluded under the base HO; a Business Pursuits or Permitted Incidental Occupancies endorsement is generally needed to extend coverage to the limited home business activity
Explanation
Standard homeowners forms exclude liability arising out of business activities. For limited home-based businesses, a Business Pursuits or Permitted Incidental Occupancies endorsement can extend liability coverage for specific qualifying activities. Larger or higher-risk operations require a separate commercial policy (BOP or CGL). California law does NOT mandate unlimited home-business liability on HO policies.
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Related questions on this topic
- Coverage E personal liability on a homeowners policy responds to which of the following?
- Coverage F medical payments to others on a homeowners policy is BEST described as:
- Which pairing of endorsement to covered loss is CORRECT?
- Coverage E on a standard HO-3 excludes liability for watercraft above certain size and horsepower thresholds. An insured who owns a 20-foot powerboat with a 90-horsepower outboard motor will most appropriately:
- An applicant for a Personal Umbrella Policy has $50,000/$100,000 auto bodily injury limits and a $100,000 HO Coverage E limit. The umbrella insurer requires $250,000/$500,000 auto and $300,000 HO E underlying. What is the MOST likely underwriting outcome?
- The standard HO-3 generally excludes liability for motor vehicles, with limited exceptions. Coverage for a snowmobile or ATV used OFF the residence premises is BEST obtained how?
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