1. Forms
2. HO
3. HO-07-51

What the form is

The HO 07 51, Additional Insured - Vendors, is an endorsement to a Homeowners Policy. Its primary purpose is to extend liability coverage to vendors who sell or distribute products related to a home-based business operated by the insured. This endorsement is specifically designed to be used with the HO 07 01 Home Business Insurance Coverage endorsement, which provides broader property and liability coverages for certain types of businesses conducted from the insured's residence.

Classes of business it applies to

This endorsement is relevant for homeowners who operate a home-based business that involves selling products through vendors or distributors. Examples include:

• An insured who makes crafts at home and sells them through local shops (the shops would be the vendors).
• Someone operating a multi-level marketing business (e.g., Amway) from home who uses other individuals to help sell the products.
• A home-based business that manufactures small goods and uses independent sales representatives or online marketplaces that might require vendor coverage.

The key is that there is a third-party vendor involved in the distribution or sale of the home business's products.

Special considerations

Important points to consider regarding the HO 07 51 endorsement:

• Must be attached to HO 07 01: This endorsement is not a standalone coverage and must be used in conjunction with the Home Business Insurance Coverage endorsement (HO 07 01).
• Scheduled Vendors: The vendors to be covered are typically listed (scheduled) on the endorsement or in the policy declarations.
• Scope of Coverage: The coverage provided to the vendor is limited to liability arising specifically from the sale or distribution of the insured's products. It does not cover the vendor's general business liabilities or other activities unrelated to the insured's products.
• Exclusions: The endorsement may contain specific exclusions. For example, there is typically no coverage for a vendor's unauthorized warranties or for liability assumed by the vendor under a contract or agreement, unless that liability would have existed even without the contract.

Key information for agents and underwriters

Agents and underwriters should consider the following:

• Nature of Products: Assess the types of products being sold. Products with higher risk profiles (e.g., items that could cause bodily injury or property damage) may require more careful underwriting.
• Vendor Operations: Understand the vendor's role and relationship with the insured. Are they reputable? What is their sales volume?
• Contractual Agreements: Review any contracts between the insured and their vendors to understand indemnification clauses and potential liability exposures. While the endorsement may not cover all contractual liability, understanding these agreements is crucial.
• Pricing: The premium for this endorsement will depend on the perceived risk associated with the products and the vendors.
• Coverage Gaps: Ensure the insured understands that this endorsement provides specific, limited coverage for vendors. It does not replace the need for the vendor to have their own commercial general liability insurance. It also does not cover professional liability exposures for the home-based business.
• Eligibility for HO 07 01: Since HO 07 51 is tied to HO 07 01, the home-based business must first meet the eligibility requirements of the HO 07 01 endorsement, such as limits on gross annual receipts and the number of employees.