“Business Pursuits” Exclusion Interpreted in Texas
Insurance Law Update
Allstate Ins. Co. v. Hallman
Texas Supreme Court
Allstate Ins. Co. v. Hallman, 2005 Tex. Lexis 251 (March 11, 2005) contains the first analysis by the Texas Supreme Court of the "business pursuits" exclusion commonly found in homeowners policies.
In the underlying lawsuit, the insured executed a mineral lease on her property in 1995 and began commercial limestone mining operations. The insured’s neighboring property owners sued for damages allegedly resulting from the mining.
The homeowners policy issued to the insured contained an exclusion for "bodily injury or property damage arising out of or in connection with a business engaged in by an insured." "Business" was defined as "includ[ing] trade, profession or occupation." In considering whether the mining operations were a "business" engaged in by the insured, the court adopted the two-part standard articulated in United Services Automobile Ass’n v. Pennington, 810 S.W.2d 777, 778-80 (Tex.App.-San Antonio 1991, writ denied). Pennington held that the inquiry involved two elements: (1) continuity or regularity of the activity, and (2) a profit motive. Id. at 780. As to the latter, the court further noted that "profit" could encompass the "expectation or anticipation for profit in the future." Id.
The Texas Supreme Court held that the limestone mining operations fell within the "business pursuits" exclusion, due to the insured’s continuous act of leasing her property to the mining company.