Does the "Business Pursuits" Exclusion Preclude Coverage for Dog Bite Injuries at a Business Dinner? – Claims Magazine
Issue:
The insured owned a business which was located on a premises separate from his home. However, the insured would regularly host dinner parties at his house for clients in an attempt to generate additional business. During one of these business dinners, the insured's household dog bit one of the insured's clients. As a result, the client sustained bodily injuries. Will the "Business Pursuits" exclusion within a Homeowners policy preclude coverage for the client's bodily injuries? We will consider coverage under two editions of the ISO Homeowners policy; (a) the ISO HO-3 Ed. 4-84, and (b) the ISO HO 00 03 04 91.
Analysis:
Under the 1984 ISO Homeowners policy, the "Business Pursuits" exclusion precludes coverage only if the bodily injury or property damage "arises out of business pursuits of the insured." Thus, in order for this exclusion to apply; (1) the insured must be engaged in a "business pursuit," and (2) the claimant's injury must "arise out of" the insured's business pursuits.
In general, courts have held that a "business pursuit" is a continuous or regular activity, which is performed for the purpose of returning a profit. State Farm Fire & Cas. Co. v. Moore, 430 N.E.2d 641 (Ill. App. 1981); Badger Mut. Ins. Co. v. Ostry, 636 N.E.2d 956 (Ill. App. 1994). Here, the insured hosted these business dinners at his house on a regular basis. Furthermore, the purpose of these dinners was to generate additional business, i.e., profit. Therefore , the insured's dinner party would constitute a "business pursuit."
Application of the "Business Pursuits" exclusion contained in the 1984 Homeowners policy requires that the claimant's injury must "arise out of" the insured's "business pursuit." Here, however, the dog bite had nothing to do with the insured's dinner party. Thus, it would be difficult to construe the activity of a household pet biting a client as "arising out of" the insured's "business pursuit." Therefore, the "Business Pursuits" exclusion found in the ISO HO-3 Ed. 4-84 policy would probably not preclude coverage here.
Furthermore, the "Business Pursuits" exclusion within the 1984 ISO Homeowners policy contains an exception to the exclusion for "activities which are usual to non-business pursuits." Here, a dog biting an insured's client at a dinner party could be considered an activity which is "usual to non-business pursuits." Thus, under this exception, the "Business Pursuits" exclusion would not apply to the facts presented.
Readers should note that the "Business Pursuits" exclusion in the 1991 ISO Homeowners policy contains language which is different from that found in the 1984 policy. Under the 1991 exclusion, bodily injury or property damage is precluded from coverage if it (1) "arises our of" or (2) is "in connection with" a business engaged in by an insured. While the language "arises out of" is the same as in the 1984 exclusion, the added option of "in connection with" broadens the scope of the "Business Pursuits" exclusion.
For example, in Nationwide Mut. Fire Ins. Co. v. Nunn, 442 S.E.2d 340 (N.C. App. 1994), an insured was in the business of giving wedding receptions in his own home. During one of these receptions, the insured's family dog bit a client. The insured in Nunn had a 1991 Homeowners policy that contained a "Business Pursuits" exclusion with the newer 1991 language. The court held that although the dog bite did not "arise out of" language. Thus, based on the court's holding in Nunn, the dog bite that occurred under the facts presented here would be considered "in connection with" the insured's business and therefore precluded from coverage.
Note that the 1991 "Business Pursuits" exclusion does not contain the "activities which are usual to non-business pursuits" exception contained in the 1984 exclusion. Thus, under the 1991 language, it is irrelevant whether a dog biting an insured's client would constitute an activity "usual to non-business pursuits." In conclusion, due to the addition of the "in connection with" language and the removal of the "non-business pursuits" exception, the "Business Pursuits" exclusion contained in the 1991 Homeowners policy precludes a broader scope of activities than the "Business Pursuits" exclusion contained in the 1984 Homeowners policy. As a result, under the facts presented here, the client's dog bite injury might be covered by the 1984 Homeowners policy, but would probably be precluded from coverage under the 1991 Homeowners policy.
The insured owned a business which was located on a premises separate from his home. However, the insured would regularly host dinner parties at his house for clients in an attempt to generate additional business. During one of these business dinners, the insured's household dog bit one of the insured's clients. As a result, the client sustained bodily injuries. Will the "Business Pursuits" exclusion within a Homeowners policy preclude coverage for the client's bodily injuries? We will consider coverage under two editions of the ISO Homeowners policy; (a) the ISO HO-3 Ed. 4-84, and (b) the ISO HO 00 03 04 91.
Analysis:
Under the 1984 ISO Homeowners policy, the "Business Pursuits" exclusion precludes coverage only if the bodily injury or property damage "arises out of business pursuits of the insured." Thus, in order for this exclusion to apply; (1) the insured must be engaged in a "business pursuit," and (2) the claimant's injury must "arise out of" the insured's business pursuits.
In general, courts have held that a "business pursuit" is a continuous or regular activity, which is performed for the purpose of returning a profit. State Farm Fire & Cas. Co. v. Moore, 430 N.E.2d 641 (Ill. App. 1981); Badger Mut. Ins. Co. v. Ostry, 636 N.E.2d 956 (Ill. App. 1994). Here, the insured hosted these business dinners at his house on a regular basis. Furthermore, the purpose of these dinners was to generate additional business, i.e., profit. Therefore , the insured's dinner party would constitute a "business pursuit."
Application of the "Business Pursuits" exclusion contained in the 1984 Homeowners policy requires that the claimant's injury must "arise out of" the insured's "business pursuit." Here, however, the dog bite had nothing to do with the insured's dinner party. Thus, it would be difficult to construe the activity of a household pet biting a client as "arising out of" the insured's "business pursuit." Therefore, the "Business Pursuits" exclusion found in the ISO HO-3 Ed. 4-84 policy would probably not preclude coverage here. Furthermore, the "Business Pursuits" exclusion within the 1984 ISO Homeowners policy contains an exception to the exclusion for "activities which are usual to non-business pursuits." Here, a dog biting an insured's client at a dinner party could be considered an activity which is "usual to non-business pursuits." Thus, under this exception, the "Business Pursuits" exclusion would not apply to the facts presented.
Readers should note that the "Business Pursuits" exclusion in the 1991 ISO Homeowners policy contains language which is different from that found in the 1984 policy. Under the 1991 exclusion, bodily injury or property damage is precluded from coverage if it (1) "arises our of" or (2) is "in connection with" a business engaged in by an insured. While the language "arises out of" is the same as in the 1984 exclusion, the added option of "in connection with" broadens the scope of the "Business Pursuits" exclusion.
For example, in Nationwide Mut. Fire Ins. Co. v. Nunn, 442 S.E.2d 340 (N.C. App. 1994), an insured was in the business of giving wedding receptions in his own home. During one of these receptions, the insured's family dog bit a client. The insured in Nunn had a 1991 Homeowners policy that contained a "Business Pursuits" exclusion with the newer 1991 language. The court held that although the dog bite did not "arise out of" language. Thus, based on the court's holding in Nunn, the dog bite that occurred under the facts presented here would be considered "in connection with" the insured's business and therefore precluded from coverage. Note that the 1991 "Business Pursuits" exclusion does not contain the "activities which are usual to non-business pursuits" exception contained in the 1984 exclusion. Thus, under the 1991 language, it is irrelevant whether a dog biting an insured's client would constitute an activity "usual to non-business pursuits."
In conclusion, due to the addition of the "in connection with" language and the removal of the "non-business pursuits" exception, the "Business Pursuits" exclusion contained in the 1991 Homeowners policy precludes a broader scope of activities than the "Business Pursuits" exclusion contained in the 1984 Homeowners policy. As a result, under the facts presented here, the client's dog bite injury might be covered by the 1984 Homeowners policy, but would probably be precluded from coverage under the 1991 Homeowners policy.
