Coverage for a Business under HO Policy
July 20, 2015
This matter involves a dispute over insurance coverage between the insured and the insurer. The case is Clarence Perry v. Hartford Underwriters Insurance Company, 2015 WL 3508099.
Perry owned and operated a business, Perry Trucking, from his residence. Perry did not have a commercial insurance policy with Hartford or any other insurance company to insure the business activities of Perry Trucking. Perry employed White as a truck driver; White had permission to use the truck for business purposes only.
On March 17, 2007, Perry noticed that the truck was missing. Perry had not assigned a job for White and when he confronted White about the missing truck, White admitted he used the truck to complete a job unaffiliated with Perry Trucking. Perry fired White and this led to a verbal and physical altercation. Perry was charged with criminal assault and, anticipating a civil lawsuit, submitted a claim with Hartford under his homeowners policy.
Hartford denied coverage based on an exclusion for business activity. Specifically, Hartford claimed that the personal injury suffered by White arose out of a dispute related to Perry Trucking and so, was not covered by the homeowners policy. This lawsuit arose from the coverage dispute.
The insurer claimed that the business exclusion applies because the alleged liability of Perry arose from operating a business. Perry maintained that there were genuine issues of material facts that defeat a summary judgment for the insurer. Perry contended that the trier of fact must consider the nature of the personal relationship between the parties and the circumstances that gave rise to the March altercation. Specifically, Perry contended that he and White had been friends before they were business associates.
The Superior Court of Delaware, New Castle County, noted that the policy excludes personal liability coverage for loss arising out of or in connection with a business conducted from an insured location. The policy defined a business as a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis, or any other activity engaged in for money. The court said that Delaware decisional law defines a business as a continuous or regular activity, cone for the purpose of earning profit, including part-time or supplemental income activities. The record was clear to the court that the reason White was at Perry's residence on March 17 was to return the Perry Trucking truck and to collect his paycheck.
The court concluded that there was no issue as to any material fact and Hartford was entitled to summary judgment. Perry owned and operated a trucking business in his residence and employed White to drive a truck. The policy at issue excludes coverage for loss arising out of or in connection with a business conducted from an insured location. The court simply could find no coverage based on the facts of this situation.
Editor's Note: The Superior Court of Delaware, in granting the insurer summary judgment, noted that the increased risk associated with operating a business was exactly what Hartford sought to exclude from coverage under the homeowners policy. Hartford did this through the exclusion; it was unambiguous and the facts of the claim clearly fell under the scope of the exclusion.