diff --git a/packages/core/src/react/hooks/__tests__/useFetchTerms.tsx b/packages/core/src/react/hooks/__tests__/useFetchTerms.tsx
index 5264ca67e..a87c84183 100644
--- a/packages/core/src/react/hooks/__tests__/useFetchTerms.tsx
+++ b/packages/core/src/react/hooks/__tests__/useFetchTerms.tsx
@@ -1,7 +1,9 @@
-import { renderHook } from '@testing-library/react';
+import { renderHook, waitFor } from '@testing-library/react';
 import { expectTypeOf } from 'expect-type';
 import { TaxonomyArchiveParams, TermEntity } from '../../../data';
 import { useFetchTerms } from '../useFetchTerms';
+import * as useFetchModule from '../useFetch';
+import { mockUseFetchErrorResponse } from '../mocks';
 
 describe('useFetchTerms types', () => {
 	it('allows overriding types', () => {
@@ -22,4 +24,28 @@ describe('useFetchTerms types', () => {
 			| undefined
 		>();
 	});
+
+	it('handles response if has error or there is no data', async () => {
+		const spyUseFetch = jest
+			.spyOn(useFetchModule, 'useFetch')
+			.mockReturnValueOnce(mockUseFetchErrorResponse);
+		const { result } = renderHook(() => useFetchTerms({ includeCustomSettings: true }));
+
+		const expectedKeys = ['error', 'loading', 'data', 'isMainQuery'];
+		const returnedKeys = Object.keys(result.current);
+		const missingKeys = returnedKeys.filter((key) => !expectedKeys.includes(key));
+
+		await waitFor(() => {
+			expect(missingKeys).toHaveLength(0);
+			expect(spyUseFetch).toHaveBeenCalledTimes(1);
+			expect(result.current.error).toBe('Not found');
+			expect(result.current.loading).toBe(true);
+			expect(() => result.current.data).not.toThrow();
+			expect(() => result.current.data?.terms[0].title).toThrow();
+			expect(() => result.current.data?.pageInfo[0].title).toThrow();
+			expect(result.current.isMainQuery).toBe(true);
+		});
+
+		spyUseFetch.mockRestore();
+	});
 });