Stan has several customers who haul their horses to his barn for shoeing. One of the customers, while helping out, got kicked and suffered paralyzing injuries.

What do Jean, Raymond, and Stan have in common? They are small equine business operators who have no business insurance and assume that their homeowner’s insurance will take care of them if a claim or lawsuit should be brought against them for these or other mishaps. Unfortunately, all of them face a serious risk that their insurance will not protect them because of the “business pursuits” exclusion often found in many of these types of liability insurance policies.

The “Business Pursuits” Exclusion

Basic liability insurance policies, such as homeowner’s and farmowner’s policies, are generally designed to protect people against claims brought by others who have suffered personal injury or property damage. Like all insurance policies, these policies include a list of exclusions where the insurer will not provide coverage. Among the many common exclusions is the “business pursuits” exclusion, where the policy, by its terms, provides no coverage. Insurers sometimes differ on how they word these exclusions. For example, one policy prevented coverage “[a]rising out of or in connection with a business engaged in by an insured.” An exclusion in a farmowner’s insurance policy prevented coverage for bodily injury “arising out of business pursuits of an insured . . ..”

How These Exclusions Work

Over the years, insurance companies have cited the policy’s “business pursuits” exclusion as a basis for denying coverage when claims arise out of small-scale business activities. For example:

     * Various insurance companies view different types of activities as “business pursuits,” even if the activities are part-time, small-scale operations such as dog-sitting, horse boarding, riding instruction, auto repair, boat deliveries, or child care.

     * Some insurers look at “business pursuits” as a trade or occupation. Some do not.

     * Some insurers look to the continuity and profit motive of the business before determining that a “business pursuit” is involved.

     * Even if the business operator takes no money for the business, however, an insurer still might find that the “business pursuits” exclusion prevents coverage for a mishap. In one case, for example, the business operator took no money for the activity (an auto repair business), but a court agreed with the insurer that the “business pursuits” exclusion prevented coverage.

     * Some, but not all, insurers never consider babysitting activities as “business pursuits.”

When insurance companies determine whether an activity, or a given incident, involves a “business pursuit,”they typically look at each claim individually, examine the policy language, and seek details on how an incident occurred.

Preventing Disputes

If you believe that the “business pursuits” exclusion may affect your activities, and if you seek to avoid problems in the future, consider the following:

1. Read your policy very carefully. Make sure you understand what your policy covers.

2. Contact your insurance agent, and possibly your lawyer, to discuss your activities and determine whether your existing coverage protects you sufficiently.

3. Consider purchasing appropriate business insurance. Different types of coverages exist that protect people who engage in equine-related businesses such as commercial general liability insurance and professional liability insurance. Some homeowners insurance companies offer special incidental business endorsements when people have small home-based businesses. Talk to your insurance agent about these and other options.

Conclusion

Keep in mind that liability insurance policies differ in their provisions, and insurers can differ in how they construe policies and evaluate claims. Added to this, courts often differ on how broadly they interpret these and other exclusions. Because of these differences, it makes good sense to consult with your lawyer and/or your insurance agent.

This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.


About the Author
Julie Fershtman, a lawyer for 20 years, is one of the most experienced and best-known Equine Law practitioners in the nation. She has won equine-related cases, appeals, and trials in different states and has drafted hundreds of contracts. An independent lawyer rating service gives her its highest rating for abilities and ethics. She can be reached at (248) 851-4111, ext. 160. For more information, visit www.equinelaw.net and www.equinelaw.info.

Prevent legal disputes tomorrow by ordering Ms. Fershtman’s books, MORE Equine Law & Horse Sense and Equine Law & Horse Sense, today. The books combine general legal principles with “horse sense” tips to avoid liability. Order both books together for $42.90, first-class shipping included. Call Horses & The Law Publishing at 866- 5-EQUINE, a toll-free number. Or, mail check or money order to Horses & The Law Publishing, P.O. Box 250696 Franklin, MI 48025-0696.