Business Pursuit Exclusion
Recently the Maryland Court of Appeals had the opportunity to review a Business Pursuit Exclusion in a homeowner’s insurance policy in the case of Springer v. Erie Ins. Exch., 439 Md. 142 (2014). That case arose from a declaratory judgment action filed in the Circuit Court for Frederick County after an insurer denied coverage for an underlying defamation lawsuit. The alleged defamation was against an individual and his company. The individual defendant sought a defense under his homeowner’s policy and the insurer denied coverage citing a standard business pursuit exclusion.
Interpreting this type of exclusion for the first time, Maryland’s highest court looked to insurance treatises and case law from other jurisdictions. In particular, it relied heavily on the following analysis:
Courts will frequently utilize a two-pronged test in deciding whether an activity qualifies as a “business pursuit”: whether the insured has (1) continuity, that is, a continued or regular activity for the purpose of earning a livelihood; and (2) a profit motive, or the showing that the activity is undertaken for a monetary gain. Moreover, the “usual non-business pursuits” provision “focuses on the objective nature of the activity itself rather than on the motivation of the policy holder.” Springer, supra (citations omitted).
Observing that the Complaint itself did not answer the two-prong continuity and profit analysis, the Court remanded the case for the trial court to consider those issues. In so doing, the Court found further support in Maryland’s jurisprudence supporting a broad duty to defend.
For more information on when a defamation claim may trigger a duty to defend, or application of exclusions in a homeowner’s policy like the business pursuit exception, contact the attorneys at Walker, Murphy & Nelson, LLP today.
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