Liability Coverages

Summary: The Association of Insurance Services (AAIS) has developed a home-based business coverage endorsement, ML-450, that may be attached to an AAIS homeowners, mobile homeowners, or farm owners policy. It extends the homeowners coverage limits so that other structures and property used in the business are covered. Liability coverage is extended to provide for bodily injury or property damage arising out of the designated business. The endorsement is not intended to cover liability arising out of professional services; however, many businesses commonly engaged in by a home-based  entrepreneur are covered. Classifications include office, retail, crafts, office, food, service, and bed and breakfast. For a discussion of the AAIS homeowners liability coverages, see Liability Coverages—AAIS Homeowners.

Liability coverage is subject to a per occurrence limit, as well as an annual aggregate limit equal to twice the per-occurrence limit. There is also a separate products/completed work hazard aggregate limit.

The liability coverages are the subject of the following discussion. For a discussion of the property coverages, see The AAIS Home-Based Business Coverage Form—Property. Included in the discussion of the property coverages are the definitions and conditions that apply to the entire coverage part.

Finally, many of the coverages, exclusions, and provisions are similar to those found in the ISO Commercial General Liability (CGL) form. The reader may wish to compare the CGL with the AAIS form. See Commercial General Liability Defintions, CGL Coverage Form—Coverage A, CGL Coverage Form—Coverage B, Medical Payments, and General Provisions of the CGL.

Topics covered: Introduction Insuring agreement Definitions Principal liability coverages Incidental liability coverages Exclusions How much we pay Optional liability coverages Additional insureds