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.The base HO-3 Coverage E will automatically cover any business-related lawsuit
b.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
c.Only a commercial general liability policy can ever cover any home-based business activity
d.Homeowners policies in California are required to include unlimited business liability
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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