Georgia Property & Casualty Practice Exam

What kind of policy typically covers contents and liability for a home operated as a business?

1. homeowners policy

2. business owners policy

3. dwelling policy

4. landlord insurance policy

The correct answer is: business owners policy

A business owners policy is designed specifically for small businesses and provides comprehensive coverage that includes property insurance, liability insurance, and additional protections that a business needs. When a home is operated as a business, the business owners policy effectively covers the contents of the home that are used for business purposes as well as any liability that could arise from business operations. This type of policy is advantageous because it combines both property coverage (for items like inventory, equipment, or furnishings relevant to the business) and liability coverage (which protects against claims of bodily injury or property damage occurring in the course of business activities). Homeowners policies typically do not provide adequate coverage for business operations conducted within the home, as they may have limitations on the types of business activities that are covered, and liability coverage may also be restricted. Similarly, dwelling policies and landlord insurance policies are not specifically tailored for home-based business operations and can lack necessary coverages that a business owner would require. Therefore, the business owners policy is the most suitable choice for a home operated as a business, as it addresses both content protection and liability in a cohesive manner.