Business Use Exclusion Applies to Sales Party?

The policyholder was hosting a Mary Kay make-up party (she was not the consultant, just the host). Once the party was over and the guests were leaving, the claimant ran through the backyard back towards the house to notify another guest that she needed to move her car so she could get her car out.  In the process of running in our policyholder's yard, the claimant fell injuring her ankle-damaged the tendon, received bad bruising, and sprain. Under the HO 3 edition 10 00, bodily injury arising out of or in connection with a business conducted from an insured location whether or not the business is owned or operated by insured or employs an insured is excluded.  Would you consider hosting a Mary Kay make-up party a business?  Our policyholder was not paid to host the party; she received free products and discounts for hosting the event.

North Carolina Subscriber

The exclusion does not apply in this instance for the following reasons. First, the insured did not receive anything for holding the party other than some free products and discounts. The free products are in the way of gifts; the discounts simply mean the hostess gets to spend money.

 

Second, the exclusion states that “'bodily injury' or 'property damage' arising out of or in connection with a 'business' conducted from an 'insured location' or engaged in by an 'insured', whether or not the 'business' is owned or operated by an 'insured' or employs an 'insured' is excluded. Looking at the wording, it is obvious that a business was not conducted from the insured premises–although business was conducted from the premises. This is a subtle distinction, I know, but is in keeping with the intention of the exclusion. Further, the insured did not own, operate, or work for the business; she simply provided a venue.  

 

For these reasons, if there is liability on the part of the insured, I believe the loss is covered. For these same reasons, medical payments coverage is available.

 

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