Does your Homeowner’s Insurance Policy Cover Your In-Home Business?

Some homeowner insurance policies have business exclusions that bar coverage for damages or injuries resulting from activity relating to a business that is operated within the home. This was demonstrated recently by a case in the Western District of Virginia in Roanoke, Pennsylvania National Mutual Casualty Ins. Co. v. Newman, Case No. 18-cv-00469. In this case, the homeowner provided daycare services for friends and family and stated that she only performed the services for a fee “from time to time.” However, she agreed that she provided daycare services for non-relatives, for which she was paid, and that she did not have daycare insurance.

The court found that, based on the facts and circumstances, the homeowner was conducting an at-home business of daycare services and that the injuries to the child arose from activities relating to the daycare activities. The court found that this fit the definition of business activity in the policy’s business exclusion. In other words, the homeowner’s insurance did not have to pay for the injury that arose from the business activity.

If you perform similar daycare services in your home in a way that can be construed as a business activity, or operate your own business of any type from home, you may be in danger of not having insurance coverage under your homeowner’s policy. Whether your business activity is covered will hinge almost entirely on the language of your policy and the type of business you are conducting. If you operate this type of small business, you should consider obtaining a separate business insurance policy to cover any activity relating to the business that takes place in your home.

If you operate a small business or are considering starting a new business, the experienced attorneys at Tate Bywater are expertly suited to assist you in avoiding this and many other pitfalls that may become significant barriers to your success.


About Ben Ader
Ben joined TATE BYWATER as an associate in October 2019.  Ben is a graduate of William & Mary Law School where he worked as a Graduate Research Fellow and served on the William & Mary Environmental Law and Policy Review.  After law school he served as a Judicial Law Clerk with the Prince William County Circuit Court.  His legal experience includes commercial litigation representing contractors and small businesses and the focus of his practice areas also includes personal injury and domestic relations.