diff --git a/.nx/version-plans/version-plan-1768982019500.md b/.nx/version-plans/version-plan-1768982019500.md
new file mode 100644
index 0000000..a372f49
--- /dev/null
+++ b/.nx/version-plans/version-plan-1768982019500.md
@@ -0,0 +1,5 @@
+---
+__default__: prerelease
+---
+
+Enables collection of coverage data in monorepository scenarios through the new coverageRoot configuration option.
diff --git a/actions/shared/index.cjs b/actions/shared/index.cjs
index 41e40ce..19ff21d 100644
--- a/actions/shared/index.cjs
+++ b/actions/shared/index.cjs
@@ -4209,16 +4209,28 @@ var coerce = {
 var NEVER = INVALID;
 
 // ../config/dist/types.js
+var RunnerSchema = external_exports.object({
+  name: external_exports.string().min(1, "Runner name is required").regex(/^[a-zA-Z0-9._-]+$/, "Runner name can only contain alphanumeric characters, dots, underscores, and hyphens"),
+  config: external_exports.record(external_exports.any()),
+  runner: external_exports.string()
+});
 var ConfigSchema = external_exports.object({
   entryPoint: external_exports.string().min(1, "Entry point is required"),
   appRegistryComponentName: external_exports.string().min(1, "App registry component name is required"),
-  runners: external_exports.array(external_exports.any()).min(1, "At least one runner is required"),
+  runners: external_exports.array(RunnerSchema).min(1, "At least one runner is required"),
   defaultRunner: external_exports.string().optional(),
   webSocketPort: external_exports.number().optional().default(3001),
   bridgeTimeout: external_exports.number().min(1e3, "Bridge timeout must be at least 1 second").default(6e4),
+  bundleStartTimeout: external_exports.number().min(1e3, "Bundle start timeout must be at least 1 second").default(15e3),
+  maxAppRestarts: external_exports.number().min(0, "Max app restarts must be non-negative").default(2),
   resetEnvironmentBetweenTestFiles: external_exports.boolean().optional().default(true),
   unstable__skipAlreadyIncludedModules: external_exports.boolean().optional().default(false),
   unstable__enableMetroCache: external_exports.boolean().optional().default(false),
+  detectNativeCrashes: external_exports.boolean().optional().default(true),
+  crashDetectionInterval: external_exports.number().min(100, "Crash detection interval must be at least 100ms").default(500),
+  coverage: external_exports.object({
+    root: external_exports.string().optional().describe(`Root directory for coverage instrumentation in monorepo setups. Specifies the directory from which coverage data should be collected. Use ".." for create-react-native-library projects where tests run from example/ but source files are in parent directory. Passed to babel-plugin-istanbul's cwd option.`)
+  }).optional(),
   // Deprecated property - used for migration detection
   include: external_exports.array(external_exports.string()).optional()
 }).refine((config) => {
diff --git a/packages/babel-preset/src/preset.ts b/packages/babel-preset/src/preset.ts
index 1d9a4b1..54df99c 100644
--- a/packages/babel-preset/src/preset.ts
+++ b/packages/babel-preset/src/preset.ts
@@ -1,10 +1,27 @@
 import resolveWeakPlugin from './resolve-weak-plugin';
+import path from 'path';
+
+const getIstanbulPlugin = (): string | [string, object] | null => {
+  if (!process.env.RN_HARNESS_COLLECT_COVERAGE) {
+    return null;
+  }
+
+  const coverageRoot = process.env.RN_HARNESS_COVERAGE_ROOT;
+  if (coverageRoot) {
+    return [
+      'babel-plugin-istanbul',
+      { cwd: path.resolve(process.cwd(), coverageRoot) },
+    ];
+  }
+
+  return 'babel-plugin-istanbul';
+};
 
 export const rnHarnessPlugins = [
   '@babel/plugin-transform-class-static-block',
   resolveWeakPlugin,
-  process.env.RN_HARNESS_COLLECT_COVERAGE ? 'babel-plugin-istanbul' : null,
-].filter((plugin): plugin is string => plugin !== null);
+  getIstanbulPlugin(),
+].filter((plugin) => plugin !== null);
 
 export const rnHarnessPreset = () => {
   if (!process.env.RN_HARNESS) {
diff --git a/packages/config/src/types.ts b/packages/config/src/types.ts
index e0580cc..87f289f 100644
--- a/packages/config/src/types.ts
+++ b/packages/config/src/types.ts
@@ -46,6 +46,20 @@ export const ConfigSchema = z
       .min(100, 'Crash detection interval must be at least 100ms')
       .default(500),
 
+    coverage: z
+      .object({
+        root: z
+          .string()
+          .optional()
+          .describe(
+            'Root directory for coverage instrumentation in monorepo setups. ' +
+            'Specifies the directory from which coverage data should be collected. ' +
+            'Use ".." for create-react-native-library projects where tests run from example/ ' +
+            'but source files are in parent directory. Passed to babel-plugin-istanbul\'s cwd option.'
+          ),
+      })
+      .optional(),
+
     // Deprecated property - used for migration detection
     include: z.array(z.string()).optional(),
   })
diff --git a/packages/jest/src/setup.ts b/packages/jest/src/setup.ts
index d22e53f..c41d784 100644
--- a/packages/jest/src/setup.ts
+++ b/packages/jest/src/setup.ts
@@ -68,6 +68,10 @@ export const setup = async (globalConfig: JestConfig.GlobalConfig) => {
     // This is going to be used by @react-native-harness/babel-preset
     // to enable instrumentation of test files.
     process.env.RN_HARNESS_COLLECT_COVERAGE = 'true';
+
+    if (harnessConfig.coverage?.root) {
+      process.env.RN_HARNESS_COVERAGE_ROOT = harnessConfig.coverage.root;
+    }
   }
 
   logTestRunHeader(selectedRunner);
diff --git a/website/src/docs/getting-started/configuration.mdx b/website/src/docs/getting-started/configuration.mdx
index cbcb9e5..6ccbc24 100644
--- a/website/src/docs/getting-started/configuration.mdx
+++ b/website/src/docs/getting-started/configuration.mdx
@@ -103,6 +103,9 @@ For Expo projects, the `entryPoint` should be set to the path specified in the `
 
   // Optional: Reset environment between test files (default: true)
   resetEnvironmentBetweenTestFiles?: boolean;
+
+  // Optional: Root directory for coverage instrumentation in monorepos (default: process.cwd())
+  coverageRoot?: string;
 }
 ```
 
@@ -324,6 +327,30 @@ const config = {
 export default config;
 ```
 
+## Coverage Root
+
+The coverage root option specifies the root directory for coverage instrumentation in monorepository setups. This is particularly important when your tests run from a different directory than where your source files are located.
+
+```javascript
+{
+  coverageRoot: '../',  // Use parent directory as coverage root
+}
+```
+
+**Default:** `process.cwd()` (current working directory)
+
+This option is passed to babel-plugin-istanbul's `cwd` option and ensures that coverage data is collected correctly in monorepo scenarios where:
+
+- Tests run from an `example/` directory but source files are in `../src/`
+- Libraries are structured with separate test and source directories
+- Projects have nested directory structures that don't align with the current working directory
+
+Without specifying `coverageRoot`, babel-plugin-istanbul may skip instrumenting files outside the current working directory, resulting in incomplete coverage reports.
+
+:::tip When to use coverageRoot
+Set `coverageRoot` when you notice 0% coverage in your reports or when source files are not being instrumented for coverage. This commonly occurs in create-react-native-library projects and other monorepo setups.
+:::
+
 ## Finding Device and Simulator IDs
 
 ### Android Emulators