Cases involving the potential applicability of the “Business Pursuits” exclusion, under the liability section of a homeowner’s policy, are often interesting. That’s because people run all sorts of businesses out of their homes -- and all sorts of mishaps can occur.
One common home-based business claim involves insureds seeking coverage for situations – often tragic – arising out of their operation of day cares for children. In general, when the insured receives compensation for providing day care serves, coverage is often denied on the basis that the operation is an excluded business pursuit.
This was the situation in Vermont Mutual Insurance Co. v. Hebert, No. 16-34 (D. Conn. Mar. 20, 2017), but with a couple of twists. Debra Samson operated a home day care. Matthew Hebert, while picking up his child from the day care, was bitten by Ms. Samson’s dog. Mr. Hebert filed suit and Ms. Samson defaulted. The court awarded Mr. Hebert $125,000 at a damages hearing.
Litigation ensued between Mr. Hebert and Ms. Samson’s homeowner’s insurer. Ms. Samson’s homeowner’s policy contained a business pursuits exclusion. And the policy even went a step further, specifically stating that a home day care is a “business,” unless it is done for a relative or without receiving compensation or as a mutual exchange. Nobody disputed that Ms. Samson’s home day care qualified as a business.
So what was Mr. Hebert to do? It seems like he had a ruff road. He made the following argument: “[Hebert] counters that coverage is not excluded, because to be excluded an injury must arise out of a business’s ‘operative activity’—here, the care and supervision of children—and that a dog bite is incident to the non-business pursuit of owning and keeping a dog.”
It’s a clever argument, and probably the best Mr. Hebert could do in the face of a tough situation, but the court did not bite, noting that “[t]he Connecticut Court of Appeals has held that the policy language ‘arising out of the business pursuits . . . of an insured’ ‘establishes an expansive standard of causation between the incident giving rise to a claim for coverage and the insured’s business pursuits.’”
With that standard in play, turning to the matter at hand, the court didn’t really struggle to conclude that the business pursuits exclusion precluded coverage: “The ‘operative activity’ here is the care and supervision of children who are too young to transport themselves. As such the children’s parents were invited onto the premises to drop off and pick up their children and pay Ms. Sampson for her services. Because the parents of her charges entered the premises for a purpose directly related, indeed essential, to the care of her charges, she owed a duty to the children as well as their parents to maintain the premises in a reasonably safe condition, and not to keep an aggressive and violent dog on the premises.”