🏠 ISO Homeowners Policy – Business Exclusion (Standard)
ISO HO-3 / HO-5 – Section II (Liability)
Business exclusion typically reads:
“Coverage E – Personal Liability and Coverage F – Medical Payments to Others do not apply to bodily injury or property damage arising out of or in connection with a ‘business’ conducted from an ‘insured location’ or engaged in by an ‘insured,’ whether or not the business is owned or operated by an insured.”
📌 Definition of “Business” (ISO Standard)
ISO policies define business as:
“A trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis; or any other activity engaged in for money or other compensation.”
This includes:
Side hustles
Part-time work
Seasonal income
Cash or non-cash compensation
🏡 What “Insured Location” Means
“Insured location” includes:
The residence premises
Other premises listed on the policy
Any part of a premises used by the insured in connection with the residence
📌 This means business activity tied to the home can trigger the exclusion — even if the actual work happens elsewhere.
❌ What Is Excluded
Under standard ISO language, homeowners policies exclude:
Liability from home-based businesses
Injuries to customers or clients
Damage caused by business operations
Business equipment or inventory beyond small sub-limits
Claims “arising out of” business activity (broad interpretation)
⚠️ Important Phrase: “Arising Out Of”
Courts interpret “arising out of” very broadly.
It does not require:
The business to be the sole cause
The business to occur at the exact moment of loss
If the business contributed in any way, the exclusion can apply.
✅ Common ISO Exceptions (Limited Coverage)
ISO provides narrow carve-outs, such as:
Volunteer activities
Home office clerical work (no customers, no inventory, no manufacturing)
Occasional babysitting
Newspaper delivery
Certain incidental activities
⚠️ These exceptions are very limited and often misunderstood.
