Georgia Adjuster Practice Test

Which of the following is considered an "incidental occupancy" under a Homeowners policy?

1. A retail shop in the backyard

2. An art studio where occasional classes are held

3. A rental unit in the basement

4. A home office for bookkeeping

The correct answer is: An art studio where occasional classes are held

An art studio where occasional classes are held is deemed an "incidental occupancy" under a Homeowners policy because it represents a minor use of the home for business purposes. Homeowners policies typically allow homeowners to engage in light business activities within the home as long as the business does not become a primary function of the property or significantly alter its use. This incidental use is recognized because it does not significantly increase the risk associated with the policy. Occasional classes in an art studio suggest that this activity is limited and not a regular business operation, thus aligning with the concept of incidental occupancy. In contrast, a retail shop in the backyard indicates a more commercial use of the property, which could involve higher risks and liability, making it less incidental. A rental unit in the basement suggests a full rental operation, which is a significant change in occupancy type, and a home office for bookkeeping might involve regular business activities that could require additional coverage under a separate business or commercial policy.