Summary: Insurance Services Office (ISO) has developed an endorsement, HO 07 01 05 11, that may be used to insure a home business. When this endorsement is attached to a homeowners coverage form, Section II liability is expanded to address the majority of situations the home business owner may encounter. Definitions are amended or added in accordance with the coverage provided. .

Following is a discussion of the liability coverages, the conditions applicable to the liability coverages, and the conditions applicable to the entire form. For a discussion of the property coverages, see ISO Home Business Insurance Coverage – Property.

Topics covered:

Introduction

Definitions

Liability coverages

Section II exclusions

Additional coverages

Section II conditions

Sections I and II conditions

Endorsements

Introduction

The ISO Home Business Insurance Coverage endorsement, HO 07 01 05 11, is designed to be attached to a standard homeowners policy, such as the HO 00 02 05 11, HO 00 03 05 11, HO 00 04 05 11, HO 00 05 05 11, or HO 00 06 05 11. It is therefore important to remember that the liability coverages and exclusions of the underlying homeowners policy continue to apply, although, of course, many definitions are amended and coverages are expanded so that the described home business is covered. Therefore, when examining the following coverages and exclusions, keep in mind that for the most they are in addition to, not instead of, the underlying homeowners coverages and exclusions.

In many instances the exclusions are similar—even identical to—those found in the Commercial General Liability form (CGL). However, since the CGL is intended to cover much greater exposures than those of the home business endorsement, there are differences. Although reference is made in this discussion to some of the CGL form's exclusions, this is for comparison only.

It is important to keep in mind that, when the HO 07 01 is attached to the homeowners, the amount of liability and medical payments to others coverages may need to be reviewed and possibly increased. In the homeowners forms, liability coverage limits are restored to the full amount following an occurrence. For example, say an insured homeowner carries $100,000 comprehensive personal liability. If he is sued due to a covered loss and, as a result, $25,000 is paid, the limits are not diminished to $75,000; they are restored to the full $100,000. This is not the case with the HO 07 01. There are two aggregates: the first of these is the same as the coverage E limit, which applies to products-completed operations. The second aggregate, which is twice the amount of coverage E plus coverage F, applies to all other business liability exposures. Although medical payments to others (coverage F) is a separate sublimit of liability, it is included within the second aggregate. Following a covered occurrence, the limits are decreased accordingly by any payments made.