Business in the Home

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Who is insured The Homeowner's Policy is written for an owner/occupant wherein the owner/occupant is using their homes "principally" for dwelling purposes. As an owner/occupant, the definition of "named insured" is "you" as it appears on the declarations, including a spouse in residence even if they are not named on the declarations. An "insured" also includes relatives and other persons under 21 in the care of the insured if in residence. Often the "business" is being conducted in a name other than the insured as it appears on the declarations. "Business" includes trade, profession, or occupation. Most courts who have examined the issue of defining "business" and "business pursuits" agree that two criteria must be satisfied for a business to exist: (a) Expectation of gain (b) At least some degree of continuity The test of "continuity" or customary engagement in any business coupled with a "profit motive" of sufficient means of livelihood has been adopted as a standard by most courts. Home Insurance Company v. Aurigemma The insured had a Homeowner's Policy and he was not an electrician by trade. However, he installed some outdoor electric lights and wiring for a friend's private residential swimming pool. The insured received reimbursement from his friend for only the cost of material and the labor for one man the insured hired. Sometime later a swimmer was electrocuted. The cause of the death was alleged to be due to the negligent installation of the lights. A suit was filed against the neighbor who installed the lights who submitted it to his homeowner's carrier. The carrier sought to deny coverage under the "business pursuits" exclusion. The court held in favor of the insured in that he was not conducting business since he made no financial profit from the work and he was not regularly engaged as an electrician.

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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and Insurance Skills Center, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.