What is a common reason for a claim to be denied under a property insurance policy?

A common reason for a claim to be denied under a property insurance policy is when the property is used for business purposes without the necessary endorsement. Standard homeowners insurance policies are designed to cover personal property and provide liability protection for the homeowner's personal use of the home. However, when a property is used for business activities, it may introduce additional risks and exposures that are not covered under a standard policy. To be eligible for coverage related to business activities, the policyholder typically needs to obtain an endorsement or a separate business insurance policy that explicitly covers those activities.

For example, if a homeowner operates a daycare out of their residence without declaring this use to the insurance company, and a claim arises from an incident related to the daycare operations, the insurer may deny the claim based on the absence of proper coverage. This underscores the importance of accurately disclosing the use of the property to ensure that the insurance coverage aligns with how the property is utilized.