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In the US homeowner's insurance usually also covers liability for unintentional acts, such as knocking over a vase in someone else's home. Suppose someone is accused of an act that would be a business activity if the accusation is true, but the homeowner claims the act never happened. For example, a notary who in reality does not charge for notarizations is accused of failing to check the ID of someone who turned out to be an imposter, but the notary claims to have had nothing to do with the purported notarization.

Would the notary's homeowner's insurance cover the notary's defense costs?

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    Check the policy details is the only general answer here. Insurance is regulated at the state level, so policies vary.
    – Jon Custer
    Commented Oct 31, 2023 at 12:31
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    Just to clarify: you are a notary, but you didn't purchase Errors & Omission insurance to cover your notarization activities. Is that correct? What about a bond?
    – mhoran_psprep
    Commented Oct 31, 2023 at 12:38
  • @mhoran_psprep yes, the hypothetical notary didn't purchase Errors & Ommissions, feeling that the occasional free notarization wasn't enough of a risk to warrant it. And the hypothetical notary lives in a state where no bond is required.
    – Gerard Ashton
    Commented Oct 31, 2023 at 13:08
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    Don't these policies usually provide liability only for injuries and property damage? It seems unlikely that a homeowner's policy would pay for legal fees related to a home business.
    – barbecue
    Commented Oct 31, 2023 at 13:19
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    @barbecue home (or renter's) insurance in Canada (and at least parts of the US, I understand?) tends to include some amount of personal/premises liability insurance. They still won't cover a home business, but I think that is OP's question, does the liability coverage kick in if you are "accused" of (but deny) doing the business.
    – mbrig
    Commented Oct 31, 2023 at 22:09

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The thing with the law is that often the correct answer to any such question is "it depends". This question would certainly qualify.

In many situations the answer would be "yes". In many cases the goal of homeowners insurance is to protect the mortgage holder from loss which is why it is required and powerful. Luckily the same provisions hold true if one pays off the mortgage.

Basically if the defendant's personal assets are at risk, then yes the homeowners insurance will provide protection. When one seeks to increase their liability protection by buying an umbrella policy, then one must first max out their liability coverage on their auto and home insurance.

It may not cover in situations where the home is owned in a trust or some other legal shelter, or if the notary has a properly setup LLC. But in those cases it is unlikely the plaintiff could attach the home anyway.

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The notary would need to read the policy very carefully. Generally personal liability policies (both homeowners and umbrella) exclude professional liability. For the situation described an E&O liability coverage would have been more suitable.

This is something the notary would probably want to get a lawyer involved in sooner rather than later. In addition to the monetary damages, there's a risk of the State coming after the notary if the alleged act is not proven to have been fabricated.

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  • Right, but part of the dispute at hand is over whether this was in fact a professional activity -- homeowner claiming that it was done purely free-of-charge.
    – Charles Duffy
    Commented Oct 31, 2023 at 19:56
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    @CharlesDuffy I don't think the fact that they didn't receive payment matters when doing professional work requiring licensing.
    – littleadv
    Commented Oct 31, 2023 at 19:58
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    The point of the question is that, according to the homeowner, the homeowner was not performing a professional activity because either the activity never happened at all, or the homeowner was not involved in it at all.
    – Gerard Ashton
    Commented Oct 31, 2023 at 20:37
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    @GerardAshton not sure what's the point of your comments. As I said - they'll need to read the policy to check what's covered, and contact the insurance company for clarifications. Most likely this would not be covered because it is a professional/business activity. If they have a professional license they should carry a professional liability or E&O coverage that would take care of this. It may be that their personal policy is permissive enough to cover that, but we wouldn't know because we don't have it in front of us. They do.
    – littleadv
    Commented Oct 31, 2023 at 20:45
  • @littleadv Can coverage depend on unproven statements by the adversary? If the adversary says business was going on it's not covered but if the adversary says social activity it's covered?
    – Gerard Ashton
    Commented Nov 2, 2023 at 1:50

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