Homeowner policies are “personal lines” policies and by their very nature are not intended to cover “commercial” exposures. However, considering the current times and technology that is available, some insureds find themselves setting up home offices.
If an insured works for a company and has an office to go to but sets up a part-time home office within the home for processing of paperwork, making telephone calls, etc. or has a part-time business at the home with no foot traffic then coverage can be provided by adding an incidental occupancy endorsement to the policy at a minimal cost if available through the homeowner carrier. (Some carriers do not offer this endorsement)
If, however, the insured sets up a home office in a DETACHED structure (such as a detached garage or outside shed) then not only does the incidental business occupancy endorsement need to be added but coverage for the detached structure must be purchased to cover the structure due to the business exposure. Normally other structures are provided coverage at 10% of the dwelling limit provided by the policy but when there is a business exposure in the detached structure, the carriers exclude the automatic coverage for this detached structure and insureds need to buy back the coverage at the estimated rebuilding cost of the building.
Lastly, if an insured has a full-time business at the home then he/she would actually need to purchase a commercial policy, known as a BOP or Package policy as this exposure is more than the incidental occupancy endorsement can cover.