National Farmers Union Property and Casualty Company v. Garfinkel, et. al. 2012COA46 (March 15, 2012)

With wildfires burning, this Homeowner’s Insurance coverage case is timely. The Insurer brought a coverage action disclaiming liability under a Homeowner’s policy for a wildfire started on property owned by a LLC operated by the homeowners. The trial granted summary judgment for the insureds, holding 2 exclusions did not apply, and coverage existed. The court of appeals disagreed in part. First, under the “Business Pursuits” exclusion, it held the test is 1) continuity or regularity of the activity, and 2) profit motive. Applying that test, the court reversed. Leasing a farm to homeowners may be a “business pursuit,” but is a question of fact requiring a trial. Second, the policy excluded uninsured property “owned” but not “controlled” by the insured. But it applies only where the insured is the title owner. Here title was in the LLC, so the exclusion did not apply to the homeowners.

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One response to “National Farmers Union Property and Casualty Company v. Garfinkel, et. al. 2012COA46 (March 15, 2012)

  1. In arriving at the test for determining whether an activity was covered by the “Business Pursuits” test, the court of appeals examined the majority and minority views held in other states regarding the scope of the exclusion. It adopted the majority view, which is more liberal and expansive, limiting coverage. The minority view applies the exclusion narrowly, and favors coverage. The minority view rejected by the appeals court was summarized as follows: “the exclusion should be limited to those activities that constitute an insured’s principal occupation.” In rejecting the narrow approach, the court found “the majority view is more consistent with the language of the policy – which defines ‘business’ with the expansive term ‘including,’ thereby contemplating that business is not limited to the ‘trade, profession or occupation’ of the insured.” For insurance companies, this opinion may be a mixed bag, if policies with the “Owned Premises” exclusions do not include “owned or controlled.”


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