SW Legal studies in Business

Business Use of Property Brings Exclusion in Homeowner Insurance Policy into Effect
Description The Virginia high court held that when a homeowner allowed a friend to use some of his property for business purposes, and that use caused a loss to occur, that the policy exclusion for damages related to losses caused by business activity came into effect.
Topic Insurance
Key Words Coverage; Homeowners; Business Use; Exclusion
C A S E   S U M M A R Y
Facts The Salzis had homeowners insurance that included coverage for a barn on their property valued at $16,120. One day the barn collapsed and the Salzis filed a claim for damages. At the time of the loss, between 1,500 and 3,000 bales of hay, owned by Marston, were stored in the barn. They hay was from Marston's farm. Not having enough storage space, the Salzis gave Marston permission to store his hay in the barn. The insurer refused to pay the claim, contending that it fell under an exclusion for damage from business use of property. The Salzis sued. The trial court held for the insurer. The Salzis appealed.

Affirmed. The policy exclusion of coverage for structures used for business applied to the barn. Even though the Salzis did not rent the barn, and allowed their farmer friend to use the barn for storage as a neighborly gesture, the hay was from a business, so there was business use of the barn. The policy does not specifically cover this situation. When a policy is unclear on a subject, it will be interpreted in the ordinary and customary way.

Citation Salzi v. Virginia Farm Bureau Mutual Insurance Co., 556 S.E.2d 758 (Sup. Ct., Va., 2002)

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