1. Forms
2. HO
3. HO-07-50

What the form is

The HO 07 50, titled "Additional Insured – Managers Or Lessors Of Premises Leased To An Insured," is an endorsement to a homeowners insurance policy. Its primary function is to extend liability coverage to a third party, specifically a manager or lessor (landlord), for premises that the insured leases to operate a home-based business. This business must be covered under the HO 07 01 (Home Business Insurance Coverage) endorsement. The coverage granted to this additional insured is specifically limited to their liability that arises directly from the ownership, maintenance, or use of the leased premises by the insured in connection with their business activities. For the endorsement to be effective, the person or organization being added as an additional insured, along with the specific address of the leased premises, must be clearly designated in the endorsement's schedule.

Classes of business it applies to

This endorsement is designed for policyholders who conduct a home-based business (as insured by HO 07 01) from a property they lease, rather than own. It is typically used when the landlord or property manager of the leased space contractually requires being named as an additional insured on the tenant's business liability insurance.

Real-world example: Imagine an insured operates a graphic design studio from a small office space they rent. Their lease agreement stipulates that the building owner (lessor) must be included as an additional insured on their liability policy. The HO 07 50 endorsement would be attached to their homeowners policy (along with the HO 07 01 for the business itself) to satisfy this requirement, providing the building owner with liability protection related to the graphic design studio's operations on the premises.

Special considerations

• Prerequisite Form: This endorsement is not a standalone coverage and must be used in conjunction with the HO 07 01 Home Business Insurance Coverage endorsement.
• Scope of Coverage: The protection for the additional insured (manager or lessor) is narrowly defined. It only applies to their vicarious liability stemming from the insured's business activities on the leased premises. It does not cover the manager's or lessor's own independent negligence or liabilities unrelated to the insured's business or the specific leased premises.
• Clear Designation Required: The full legal name of the manager or lessor and the precise address of the leased premises must be accurately listed in the endorsement schedule for coverage to apply. Any ambiguity can lead to coverage disputes.
• No Separate Policy: It's important to note that this endorsement extends coverage from the insured's existing homeowners policy; it does not create a new or separate insurance policy for the additional insured.

Key information for agents and underwriters

• Risk Assessment: Underwriters should evaluate the nature and risks of the home-based business being conducted on the leased premises. The potential for liability to the property owner/manager due to the insured's business operations should be considered. The physical condition and safety features of the leased premises may also influence the underwriting decision.
• Verify Lease Agreements: Agents should request and review the lease agreement between the insured tenant and the lessor. This helps ensure the HO 07 50 endorsement adequately meets any contractual insurance obligations imposed on the tenant.
• Accurate Scheduling: Precision is critical when listing the additional insured's name and the premises address in the schedule. Errors or omissions can jeopardize coverage for the additional insured.
• Adequacy of Limits: The liability coverage extended to the additional insured is subject to the liability limits of the main homeowners policy and the HO 07 01 endorsement. Agents should discuss with the insured whether their current coverage limits are sufficient, especially now that an additional party is relying on those limits.
• Liability vs. Property Coverage: This endorsement provides liability protection. It does not cover physical damage to the property owned by the additional insured (e.g., the building itself if owned by the lessor). The lessor should have their own commercial property insurance for such risks.
• Understanding HO 07 01: The coverage provided by HO 07 50 is intrinsically linked to the terms, conditions, and exclusions of the underlying HO 07 01 Home Business Insurance Coverage endorsement. A thorough understanding of the HO 07 01 is essential for both agents and underwriters.