Questions regarding whether an activity must have an element of continuity, or a profit motive have been presented to courts, with varying answers. Is a hobby a business? What about a part-time endeavor? It is often suggested that there is no ready answer regarding the application of the business pursuits exclusion. Applying the generally accepted methods of interpreting contracts if the term “business” or “business pursuits” is found to be ambiguous will be construed against the insurer and in favor of the insured. This is often called the contra preferentum rule.

Disputes particularly arise as to whether an activity is directly related to the business activity, or is incidental to the business. Each fact pattern will be examined in view of the particular circumstances and the position taken by the particular jurisdiction.

The Insurance Services Office (ISO) homeowners 2011 program gives some coverage for certain activities, as do the current American Association of Insurance Services (AAIS) homeowners forms. The forms will be examined in this discussion.

Topics covered:

Evolution of the business pursuits exclusion

What are business pursuits?

The element of continuity

The profit motive

Exception to the business pursuits exclusion

Other business activities on residence premises

Current ISO and AAIS exclusions and exceptions

Hobbies

Social activities related to business

Workplace activities

Farming

Rental of premises to others

Outside directors

Political activities

Foster care

Vacant land

The final word

Evolution of the Business Pursuits Exclusion

 Personal liability insurance—whether written as part of a homeowners package, or as a separate comprehensive liability policy—is designed to protect the insured and family members from negligence claims they might incur in their private (as opposed to business or professional) activities. Coverage encompasses claims arising out of conditions at the insured's residence or out of personal, nonbusiness activities of an insured away from the residence.

 The Insurance Services Office homeowners (ISO) and American Association of Insurance Services (AAIS) forms (and virtually all other homeowners forms) contain specific exclusions of liability for bodily injury or property damage arising out of any business engaged in by an insured. (We will look at the current wording of the forms later under the heading Current ISO and AAIS Exclusions and Exceptions.)

 That business exposures should be excluded from a policy designed to cover personal exposures is seldom, if ever, questioned. Other liability policies, expressly designed to cover business and professional activities, are available and should be purchased by insureds who are subject to those exposures. However, many insureds, like the homemaker who babysits her working neighbor's children, do not think of a part time or sideline occupation as a business pursuit.

 In the ISO 1984 homeowners, there was no coverage for bodily injury or property damage “arising out of business pursuits of an insured,” but the exclusion continued: “This exclusion does not apply to activities which are usual to non-business pursuits.” And, because business was defined as including a trade, occupation, or profession, insureds were supported in their assumption that these activities were not intended to be excluded. Many persons would not see an activity from which they made a modest amount of money as a trade, occupation, or profession.

 This frequently led to difficulties for personal liability insureds. Claims stemming from sideline occupations or arising out of incidents connected with the insured's employment by others arose frequently, with the resultant conflict between coverage and the business pursuits exclusion. ISO made a change to policy language under endorsement HO-350 (attached to the 1984 homeowners, and later incorporated into the 1991 forms). The 1991 ISO forms exclude coverage for liability “arising out of or in connection with a 'business' engaged in by an 'insured'. The exclusion applies, but is not limited to, “an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the 'business'.” A “business” was defined as including a “trade, profession or occupation.” Note that here the exception to the exclusion—for activities usual to nonbusiness pursuits—was removed.

 The AAIS homeowners forms took a somewhat different approach in that the definition stated: “'Business' means a trade, a profession or an occupation including farming, all whether full or part time… 'Business' includes services regularly provided by an 'insured' for the care of others and for which an 'insured' is compensated. A mutual exchange of like services is not considered compensation… 'Business' does not include part-time or seasonal activities that are performed by minors, or activities that are related to 'business', but are usually not viewed as 'business' in nature.” With the AAIS homeowners revisions beginning in 2006, similarly to the ISO forms, the exception to the exclusion was removed.

 The current ISO and AAIS forms have changed the definition of “business,” but it remains to be seen what effect this will have. Currently, this area of conflict is considerably narrowed to the benefit of insurers and with some possible loss of protection for insureds.

 As noted, the 1991 ISO homeowners forms define “business” as including a “trade, profession, or occupation.” Because “trade,” “profession,” and “occupation” are not further defined or limited, it has been left up to the courts to interpret the definition and exclusion as they apply to specific cases. Unfortunately, the courts have not been able to agree either, giving rise to a steady stream of litigation on this subject. The current definitions, which allow activities generating a certain level of income to not be considered a business, will not answer the questions satisfactorily. Incidents will still occur at an insured's workplace that will cause courts to determine whether, say, the accidental bumping of a fellow employee arose out of the business or was incidental to it.

 The Iowa Supreme Court stated, “The doctrine [of reasonable expectations] is carefully circumscribed and does not contemplate the expansion of coverage on a general equitable basis.” Johnson v. Farm Bureau Mut. Ins. Co., 533 N.W.2d 203 (Iowa 1995); accord Am. Family Mut. Ins. Co. v. Corrigan, 697 N.W.2d 108 (Iowa 2005). The doctrine can be invoked only when an exclusion (1) is bizarre or oppressive, (2) eviscerates terms explicitly agreed to, or (3) eliminates the dominant purpose of the transaction. Moreover, as a precondition to reliance on this doctrine, an insured must establish that an ordinary layperson would misunderstand the policy coverage, or that there are circumstances attributable to the insurer that led the insured to expect coverage. For example, in a case where the insured did not dispute that her child day care service, which she had operated for fifteen years, constituted a business pursuit. She relied instead on the portion of the exclusion that exempted activities ordinarily incident to nonbusiness pursuits, which was found by the court to not apply. Grinnell Mut. Reinsurance Co. v. Voeltz, 431 N.W.2d 783 (Iowa 1988), followed in State Farm Fire & Cas. Co. v. Mrzlak, No. 13-1552, 2015 WL 5577990 (Iowa Ct. App. Sept. 23, 2015).

 However, a business pursuits exclusion of homeowners policy did not relieve an insurer of the duty to defend a named insureds' adult son, a licensed electrician, in suit by plumbing subcontractor's employee to recover for fall from deck after leaning against railing left unfastened by son after disposing of bathtub during bathroom renovation. The complaint alleged that the son served as a general contractor, but did not indicate that he served as electrician for the renovation or that he regularly engaged in supervisory or disposal activities, extrinsic facts known to insurer indicated that son lived with named insureds, and son's desire to contribute his labor out of a desire to help his parents and improve the resident, rather than for personal profit, was plausible. Preferred Mut. Ins. Co. v. Vermont Mut. Ins. Co., 87 Mass. App. Ct. 510 N.E.3d 336 (2015).

 The cases discussed in this article fall into two broad groups, those questioning whether the activity giving rise to a claim was in fact a business pursuit, and those in which a business pursuit is clearly involved, but the question is whether or not the activity giving rise to the claim is usual (or ordinarily incident) to a nonbusiness pursuit. These latter cases often involve home day care.

 What Are Business Pursuits?

 Many courts that have examined the definition of business and the business pursuits exclusion are in agreement that a business pursuit must involve two elements: continuity of the activity, and monetary gain—or, with some courts, at least the hope or expectation of monetary gain.

 For example, under Minnesota law, when a child's injury arose out of an insured's daycare business, the child's claim against the daycare operator fell within scope of a homeowners' policy's business exclusion. Where the child was a client of the daycare business when injured by another child on the daycare premises at the time when the insured was responsible for providing daycare services, and the accident was the kind of risk that is associated with operating the daycare, the exclusion applied. Metro. Prop. & Cas. Ins. Co. v. Adamez, No. CIV. 14-3430 DSD/FLN, 2015 WL 1585678 (D. Minn. Apr. 9, 2015). Courts applying this two-part test generally find that if the activity meets both requirements, it is considered a business activity even though it may be a secondary occupation and not the insured's regular, full-time occupation. Note that the definition of business does not say the trade, profession, or occupation—wording which would strongly support limiting the exclusion to the primary occupation. However, not all courts follow these general rules, and there are several instances of cases with almost identical circumstances that have rulings on opposite sides of the question.

 The Element of Continuity

 Most courts require that the insurer establish two elements for the finding that the insured was engaged in a business pursuit at the time of the occurrence. The activity must be continually or regularly conducted and must also be engaged in with a profit motive. There is some difference of opinion among jurisdictions about what constitutes a continually or regularly conducted activity, but the majority view is that the activity need not be the insured's primary occupation.

 This view was adopted in Heggen v. Mountain West Farm Bureau Mut. Ins. Co., 715 P.2d 1060 (Mont. 1986). The court found that the insured was engaged in a business pursuit when a participant in a steer-roping contest conducted on his land was injured by a horse falling on him. The insured had constructed a permanent arena and charged participants a fee for the events which he had held three or four times a year for three years. The court noted that the insured's tax returns showed no profit from the venture, after deducting expenses from receipts, but found that the evidence showed a profit motive. The regularity of the contests in a permanently installed arena, along with the fees paid by customers, led the court to the conclusion that the activity was a business pursuit.

 Other courts have held that seasonal or occasional activities do not meet the continuity requirement satisfied in the previous example, such as MFA Mut. Ins. Co. v. Nye, 612 S.W.2d 2 (Mo. Ct. App. 1980) (finding occasional summer lawn maintenance by insured's son did not qualify as a business pursuit). Activities that only occupy the insured's spare time, without a regular commitment, have been found not to constitute business pursuits, as have cases where the insured only engaged in the alleged activity once.

 With respect to proper motive, courts are divided regarding whether the activity under scrutiny must be the insureds sole means of income or whether the business pursuits exclusion may apply to part-time or occasional work. For example, consider Stuart v. Am. States Ins. Co., 932 P.2d 697 (1997), which held, “A profit motive is a necessary consideration in evaluating whether a pursuit is in fact a business.” Also, in Travelers Indem. Co. v. Fantozzi, 825 F.Supp. 80 (E.D.Pa.1993), babysitting that had a profit motive because it was a way to earn income was, therefore, a business pursuit. In Stoughton v. Mut. of Enumclaw, 810 P.2d 80, 83 (1991) (holding that the activity need not be solely motivated by profit, nor a major source of livelihood to demonstrate profit motive and Wiley v. Travelers Ins. Co., 534 P.2d 1293(Ok.1974) that held, “Profit motive, not actual profit, makes a pursuit a business pursuit.”

 In Melby v. Metropolitan Prop. and Cas. Ins. Co., 283 N.W. 2d 618 (Wis. Ct. App. 2015), the Wisconsin Court of Appeal found no coverage and applied the business pursuit exclusion because the injury occurred in a garage where the insured conducted a business.

 But in Rufener v. State Farm Fire & Cas., 585 N.W.2d 696 (Wis. Ct. App. 1998), the court found that even though a part-time business—snowplowing—was involved, the activity that caused the injury was not ordinarily part of or related to the business. Rufener was injured when he attempted to help the insured install a hoist intended to lift a salter/sander on top of the insured's pickup. Even though the salter/sander was to be used in connection with the snowplowing, the court found homeowners coverage for the injury. The court said that installing the hoist was a one-time occurrence, and so was not a regular part of the business.

 The reasoning in this case may have been the same as in Brown v. Peninsular Fire Ins. Co., 320 S.E.2d 208 (Ga. Ct. App. 1984). Here, the court held that the insured was not engaged in a business pursuit so that his homeowners insurance covered a claim against him for damage to a contractor's bulldozer. The insured was a real estate broker who had bought and commercially developed vacant land several times. In this instance, the insured and a partner had again purchased vacant land and the insured had hired a contractor to grade the land so that it could be developed. An employee of the contractor was using the bulldozer to grade the land when he hit an unmarked fuel pipeline, causing damage to the machine, and the contractor sued. The court viewed Webster's definition of “business” (“a usual commercial or mercantile activity customarily engaged in as a means of livelihood”) as limiting business pursuits to the insured's primary profession of real estate sales, citing an  earlier decision by the same court as precedent (Southern Guaranty Ins. Co. v. Duncan, 206 S.E.2d 672 [Ga. Ct. App. 1974]). Thus, the exclusion did not apply since the insured did not customarily engage in property development.

 In Oregon, the court in State Farm Fire and Cas. Co. v. Sauer, No. 3:14–CV–01274–BR, 2015 WL 510963 (D.OR. Feb.6, 2015) concluded that the business pursuits exclusion relieved the plaintiff from its otherwise-existing duty to defend for “bodily injury or property damage arising out of business pursuits of any insured.” The suit alleged that Stahl was at the Milwaukie Investment Property “at [Sauer's] invitation, and for [Sauer's] business purpose“ in that Stahl's family was a potential purchaser of the Milwaukie Investment Property. The business pursuits exclusion by its plain language excludes coverage if the conduct was undertaken as part of a business pursuit or purpose. As noted, Sauer alleges in the second amended complaint that he was on the property for business purposes.

 In a suit regarding the wrongful death of a child, the named insureds, Kenneth and Linda Rockhold, who are owners and operators of Lynn's Little Wonders daycare, allegedly failed to properly account for a client's daughter's whereabouts, and left her unattended inside the Rockhold's parked vehicle outside of the daycare on a hot day. The answers filed by the Rockhold's did not deny that they owned or operated the daycare. The daycare was a business activity, and is required by law to be licensed by the state. Accordingly, the business pursuits exclusion of the policy issued by Erie Insurance Property And Casualty Company precludes coverage of “bodily liability coverage” and “medical payments to others coverage.” Erie Ins. Prop. & Cas. Co. v. Rockhold, No. 6:13-CV-20879, 2014 WL 1783603 (S.D.W. Va. May 5, 2014)

 In contrast, in Fire Ins. Exch. v. Jiminez, the fact that the decision to raze a lean-to porch on a commercial building owned by insured was a “one-time decision” did not alter the fact that the insured was engaged in a business pursuit. Insured decided to raze the porch because it had become a nuisance. An individual who had permission to salvage materials was injured while doing so. The injured party sought liability coverage through the insured's homeowners insurance. The court noted that although the particular decision to allow the salvage was only made once, since it related to a commercial building that had been owned by the insured for many years, and was used in his produce business, so the decision related directly to the insured's business activities. Fire Ins. Exch. v. Jiminez, 184 Cal. App. 3d 437, 229 Cal. Rptr. 83 (Ct. App. 1986)

 Similarly, the leasing of real property may be a business pursuit of the insured, even if someone else manages the property. In Becker v. State Farm Fire & Cas. Co., 664 F. Supp. 460 (N.D. Cal. 1987) the insureds' ownership of a movie theater, which was being temporarily managed by a third party was clearly a business pursuit despite the fact that it was a “one-time deal” and in a similar case Gaynor v. Williams, 366 So.2d 1243 (Fla. Dist. Ct. App. 1979) a business pursuits exclusion applied where the insured owned an apartment complex which was run through a general manager. Also reference National Farmers Union Property and Cas. Co. v. Garfinkel, 277 P.3d 905 (2012)

 The Profit Motive

 The majority view is that a business pursuit is an activity in which the insured has been engaged with a profit motive (in addition to being an activity conducted with continuity). However, at least one court has found that the profit motive is irrelevant under certain circumstances. There is general (but not unanimous) agreement that the activity need not be the insured's sole occupation or source of livelihood, so that part-time business activities also come within the scope of the exclusion. (This thinking would also be the outcome in relation to the ISO 2000 and AAIS exclusions.) Furthermore, many courts would agree with the Oklahoma Supreme Court in Wiley v. Traveler's Insurance Co., 534 P.2d 1293 (Okla. 1974) that the element of profit motive is met even if the venture is not successful, so long as the insured is motivated by financial gain.

 In Wiley, the court stated that any activity that involves profit motive—regardless of actual profit made—should be considered a business pursuit. The court ruled that the insured's hobby of raising and selling dogs constituted a business pursuit and coverage was denied for injuries to a customer who was attacked by one of the dogs. However, four of the nine justices in Wiley disagreed strongly with this decision. These dissenting justices argued that the profit motive in this activity of the insured was not sufficient to make it a business pursuit. The insured had a full time job earning in excess of $10,000 a year, which they reasoned was his stated occupation. Even though some of the dogs sold for as high as $300, the dissenting opinion pointed out that the insured did not consider this activity an important source of income because some dogs were sold for as little as $75 and others were given away.

 In some cases, it may be possible for the insured to derive a financial benefit from an activity without realizing a profit. This was the case in Saha v. Aetna Casualty & Surety Co.. The insured was not covered for liability due to the business pursuits exclusion when a child drowned in a pond on land used in connection with a cattle operation the insured had been involved in for several years. The business pursuits exclusion applied even though the insured, a doctor, did not make his living raising cattle and the venture was unprofitable. The court found that an absence of profit from the activity was not significant, particularly since the insured used the venture to take deductions from his income taxes, providing a de facto financial benefit. (Saha v. Aetna Casualty & Surety Co., 427 So.2d 316 (Fla. Dist. Ct. App. 1983))

 Although profit motive is an essential element of a “business” an insurer relying on a business pursuits exclusion must demonstrate that the insured regularly engaged in a particular activity with a view toward earning a livelihood or making a profit. Generally, the business pursuit exception is intended to apply to all activities that are involved in furtherance of any business, employment, trade, occupation, or profession. New York courts held that the business pursuits exclusion applies where the contact applies where the conduct is “incidental to the insured's employment.” Salimbene v. Merchants Mut. Ins. Co., 217 A.D. 2d 991, N.Y.S. 2d. 913 (1995).

 In Macdonell v. OneBeacon American Ins. Co., it was alleged that MacDonell, made defamatory statements about Englert's conduct as a forensic consultant. Regardless of whether MacDonell made the actual statements for profit, which it is not alleged that he did, the statements relate directly to the business profession in which both Englert and MacDonell are engaged. The complaint did not suggest that MacDonell would have made such statements but for his professional relationship with Englert or that such statements relate to anything other than Englert's forensic consulting activities. MacDonell v. One Beacon Am. Ins. Co., No. 12-CV-6258, 2013 WL 6181867 (W.D.N.Y. Nov. 25, 2013)

 United Food Service, Inc. v. Fidelity & Casualty Co. of New York, found that the policy's nonbusiness exception to the business pursuits exclusion is inapplicable since the insured's activities were not merely incidental to nonbusiness pursuits and thus cannot be deemed to have constituted nonbusiness pursuits as to trigger the nonbusiness exception. The conduct also falls within the business pursuits exclusion as the statements were, at least, incidental to MacDonell's forensic consulting business. Therefore, Plaintiff is not entitled to a defense or indemnification for the underling lawsuit. MacDonell v. One Beacon Am. Ins. Co., No. 12-CV-6258, 2013 WL 6181867, (W.D.N.Y. Nov. 25, 2013), and United Food Service, Inc. v. Fidelity & Casualty Co. of New York, 74 N.Y.S.2d 887 (3rd Dep't 1993).

 Some courts have ruled that a small amount of profit that is earned by a minor child for something other than self-support is not enough to activate the business pursuits exclusion. In AMCO Ins. Co. v. Moran, 929 P.2d 162 (Kan. 1996) the court held that the money received ($2.00 per hour) by an insured youngster to babysit was not such a source of money as to meet the test of a profit motive. In this case, a child in the insured's care was badly burned in a hot bath, and the parents sued. The insurer denied coverage, citing the exclusion for bodily injury arising out of or in connection with a business. The court disagreed, stating that the small amount of money earned could not even begin to provide a livelihood, and so the babysitting fell outside the exclusion. (The court also noted that not all babysitting would be covered; possibly thinking of the home day care cases we will discuss below.)

 At least one court has held that the absence of a profit motive is irrelevant to the question of whether the insured was engaged in a business pursuit when the activity “is incidental to the insured's regular employment.” This decision was reached by a federal appeals court, applying Missouri law, in American Family Mutual Ins. Co. v. Nickerson, 813 F.2d 135 (8th Cir. 1987). The case involved an insured who was an off-duty policeman. While walking in his neighborhood one night, he observed a man sitting in his car with the motor running and the parking lights on. Because there had been several burglaries in the neighborhood recently he believed that another burglary was in progress, so he got his revolver and went over to the car. He showed his badge to the man sitting in the car, stated that he was a police officer, and ordered the man from the car. The man got out of his car but made some kind of gesture that made the insured think that he was reaching for a weapon. The insured shot the man in the face. As it turned out, the injured party and his wife had been visiting friends in the neighborhood.

The insured argued that he was acting both as a homeowner and as a neighbor, and not in his official capacity as a police officer at the time of the shooting. The court responded that he had invoked his official authority and that police officers, even off duty, have the obligation to investigate suspected criminal activity. The profit motive was irrelevant because his acts were incidental to his regular employment, and the business pursuits exclusion applied.

 When the insurer raised a genuine issue of material fact regarding the application of the “business pursuits” exclusion because of the existence of a profit motive finding that the operation of land to collect rents was sufficient to defeat a demand for defense or indemnity. Aggio v. Estate of Aggio, No. C 04-4357 PJH, 2008 WL 2491697, (N.D. Cal. June 19, 2008). Also see, Uhrich v. State Farm Fire & Cas. Co., 135 Cal. Rptr. 2d 131 (2003), and State Farm Fire & Cas. Co. v. Drasin, 199 Cal. Rptr. 749 (Ct. App. 1984).

 In Home Ins. Co. v. Aurigemma, a person was electrocuted in a swimming pool following electrical work performed by the insured as a favor for a friend. The court held that friendly help done as a favor (no charge) was not a business pursuit even if the help was within the insured's business specialty. The facts of the case indicated that the insured's only regular and continued occupation was his employment as an estimator for a public utility company. Although trained as an electrician for several years, he had not engaged in installation of electrical wiring. The insured derived no profit from the installation of wiring in his friend's pool since he did not charge for his time and labor, only for the materials. Home Ins. Co. v. Aurigemma, 257 N.Y.S.2d 980 (1965).

 The majority of jurisdictions that have considered this issue have followed the decision made in Home Ins. Co. v. Aurigemma, holding that the term business pursuits means a continued or regular activity that is conducted for the purpose of profit, such as a trade, profession, or occupation. (Pac. Indem. Ins. Co. v. Aetna Cas. & Sur. Co., 688 A.2d 319 (1997)). Ultimately, “[t]he determination of whether a particular activity constitutes a business pursuit is to be made by a flexible fact-specific inquiry” as stated in Berardino v. Hartford Underwriters Ins. Co., No. FSTCV106005619S, 2012 WL 1222356, (Conn. Super. Ct. Mar. 23, 2012).

 And in Rayburn v. MSI Ins. Co., 624 N.W.2d 878 (Wis. Ct. App. 2000), the insured, sole proprietor of a carpentry business, helped his father, brother, and a neighbor build a shed on the father's property. The neighbor was injured, and sued the carpenter, who tendered defense to both his homeowners and his businessowners insurers. The insurers each moved for summary judgment, asking for a ruling that their respective policies did not cover the loss. The homeowners carrier argued that the insured was engaged in the conduct of his business and cited the business pursuits exclusion. The businessowners carrier argued that even though building the shed was certainly an activity the insured might engage in during the course of his business, nonetheless on the day of the occurrence the insured was simply helping his father. The court agreed with this line of reasoning, saying that the homeowners insurer was the one to provide a defense and coverage.

 Sometimes an insured wants an incident to be part of his or her business pursuit to obtain coverage under his business policy as a covered risk of loss rather than as an exclusion. The policy language “conduct of business” is unambiguous and applies to any activity that is performed for the purpose of business. In Schofield v. Smith, when a party was injured during a hunting incident, Smith focuses on his alleged purpose for going deer hunting, rather than on the act of deer hunting itself. Smith asserts that he went deer hunting for the sole purpose of promoting his business and building goodwill or, “to keep a customer happy.” Therefore, he maintains that because his purpose for deer hunting was related to his business, the hunting accident occurred with respect to the conduct of his business.

 Society responds that the policy language is unambiguous, however, it applies only to the type of activities that comprise the business's activities and are also performed in furtherance of the business. Society asserts, “A person's internal intentions when he goes hunting do not control whether the activity is within the conduct of his tavern business.”

 Smith did not dispute that deer hunting is not an activity in which he engages in the usual course of his tavern business. Because his sole argument for coverage rests on his assertion that he agreed to join Schofield for the purpose of building “business goodwill,” which they concluded is not sufficient to trigger liability, Smith was not an insured within Society's policy definition when he was deer hunting. The court concluded that the act of loading a gun into a vehicle includes the preparatory act of removing ammunition from it, and as such, it constitutes a “use” of a vehicle. Therefore, there is potential coverage for Smith's injuries under the auto policies. However, because Smith was not engaged in the “conduct of a business” when he joined Schofield in deer hunting, the businessowners policy does not provide coverage for Schofield's injuries. Schofield v. Smith, 2003 WI App 188, 266 Wis. 2d 1061, 668 N.W.2d 563.

 Exception to the Business Pursuits Exclusion

 The 1984 ISO homeowners included an exception to the business pursuits exclusion, and that was for activities “usual to nonbusiness pursuits.” As noted, this exception does not appear in the later ISO or AAIS exclusions. Many insurers have by now adopted the deletion, but cases involving the exception to the exclusion are still being decided. For this reason, and because of the exception, cases analyzing this provision are presented below. Many of the cases interpreting the exception have involved babysitting activities in the insured's home.

 A case in which the exception applied to allow coverage is Vandenberg v. The Continental Ins. Co., 628 N.W.2d 876 (Wis. 2001). Vandenberg's infant son suffocated to death while in the care of Stephanie Riehl. Continental cited the exclusion, and Vandenberg sued, alleging Riehl's negligent supervision of her own son, who had accidentally caused the death of the infant, was the cause of the loss. The court found that Riehl's supervision of her own child was not related to her business of providing child care, and thus held for coverage.

 But in American Family Mut. Ins. Co. v. Moore, 912 S.W.2d 531 (Mo. Ct. App. 1995), the insured cared for two children in her home after school. Her son owned a dog that bit one of the children. When a suit was filed, the Moores turned the claim over to their insurer, which filed for declaratory judgment. Although the court agreed that keeping a dog was a nonbusiness activity, the babysitting was the activity leading to the injury. Had it not been for the babysitting the children would not have been on the premises and so the injury would not have occurred.

In Elorza. v. Massey, 783 So. 2d 453 (La. Ct. App. 2001), the policy excluded “bodily injury or property damage arising out of the past or present business activities of an insured person.” “The phrase 'arising out of' implies an element of causality, though not necessarily the proximate cause,” stated the court, in finding that there was no coverage when a child was injured at the insured's in-home day care facility. The child fractured her knee when she was allegedly pushed down onto a trampoline by another child. The fact that the trampoline was normally used by the insured's family did not circumvent the exclusion because the trampoline was often used as well by the children in the facility.

In State Farm Fire and Cas. Co. v. Mrzlak, Dawn Mrzlak, also known as the insured, entered into an arrangement to care for the Johnson children within Bryan Johnson's residence for part of each week. In addition to caring for the children, Dawn also occasionally performed housekeeping. From August to December, Dawn provided the agreed upon services and Johnson compensated her for her services. The mother of Johnsons children, Jennifer Woodbury, was not living in the residence while Dawn provided childcare and housekeeping, but one week prior to the Christmas holiday Jennifer moved into the Johnson home. Dawn continued caring for the children, but at her home instead of the Johnson home. One day the children were being cared for at the insureds home, the minor daughter was bitten by the Mrzlak's dog.

 The trial court found, “Despite the relative menial pay, the childcare services provided by Mrzlak (the insured) were continuous and motivated by profit.” Substantial evidence supports this finding.

 The insureds claim that the care of the children at the insured's house was outside of the arrangement between the insured and Johnson, and fell within the exception to the business pursuit exclusion which states that activities that are ordinarily incident to non-business pursuits are not covered by the exclusion. The district court found that the testimony in which Dawn stated that she provided the child care as a favor was a “self-serving attempt to avoid the result of an exclusion” and coverage was refused. State Farm Fire & Cas. Co. v. Mrzlak, No. 13-1552, 2015 WL 5577990 (Iowa Ct. App. Sept. 23, 2015).

 Other Business Activities on Residence Premises

 Although most court cases concerning a business conducted in the home involve babysitting, a variety of other service occupations are also commonly conducted in a residence. As the following case illustrates, insureds with businesses in their homes would do well to buy extra coverage rather than rely on their homeowners liability coverage. Certain homeowners endorsements can be added to provide the necessary protection. For a discussion see Standard Homeowners Endorsements. Both ISO and AAIS have developed coverage for home-based businesses—those where the business may be an insured's chief livelihood. (These forms are not intended for home day care coverage.) See AAIS Home-Based Business Coverage Form—Property; see AAIS Home-Based Business Coverage Form—Liability; see The ISO Home-Based Business Coverage—Property; and see ISO Home-Based Business Coverage—Liability.

 In Callahan v. American Motorist Ins. Co., 289 N.Y.S.2d 1005 (1968) the insured was a real estate broker who conducted the business from his home. Another broker was injured on the insured's premises when she came to pick up a key to property that had been listed for sale. The court in New York held that the injury arose out of the insured's business pursuit and thus there was no coverage under the homeowners policy. Clearly, added the court, there was an increased risk—due to the traffic that a business office generates—and this is what the insurer intended to and did exclude from coverage through the business pursuits exclusion.

 The circumstances were somewhat different in Georgia Farm Bureau Ins. Co. v. Caster, 546 S.E.2d 30 (Ga. Ct. App. 2001), although a real estate business was involved. The policy contained an exception for activities usual to nonbusiness pursuits. The insured normally visited clients in their homes, but in one instance the client visited the realtor. When she went into another room to use a copier, the client walked around and fell down a step into the sunken living room, injuring himself. The insurer denied coverage for the claim, citing the exclusion. But the court said maintaining a home was usual to a nonbusiness activity, and so there was coverage for the claim.

 An insured decided to host a birthday party for himself, and, because of the number of invited guests, used a warehouse which he leased for a business and which was some twenty miles from his home. A guest was injured, and sued. The homeowners insurer denied coverage, citing both the business pursuits exclusion and the distance from the residence premises. The court said that the distance did mean the warehouse was not “used in connection with” the residence premises, and was thus an insured location. Further, the party was not in any way connected with business, and so the exclusion did not apply. This case is Erie Ins. Exchange v. Szamatowicz, 597 S.E. 2d 136 (N.C. Ct. App. 2004).

 In Spears v. Shelter Mut. Ins. Co., the business-pursuits exclusion in professor's liability insurance policy failed to preclude an insurer from having a duty to defend a professor in a student's action which asserted that the student sustained emotional and psychological trauma due to professor's threatening actions when he became enraged during class, although student alleged that the professor was spitting during the incident and had struck a fellow student, where student, in her petition, alleged that professor suffered from a mental health issue that caused delusions, that the professor was suffering from a delusion at the time of the incident, and that the professor's actions could have been the result of his mental disorder. Accepting as true the allegations that the professor was suffering from a mental disorder, and the trial court correctly observed that the mental health allegations necessarily factored into the question of whether the specific conduct could be viewed as accidental. For this reason, the court found no error in the trial court's rejection of Shelter's alternative contention that the conduct was excluded either as an intentional act or as undertaken as part of a business pursuit.

 Though the petitions allege outrageous conduct and that it occurred in the classroom where the professor was conducting a class, those circumstances cannot be viewed absent the allegation of the delusional episode. The petition alleged only intentional acts and that they were undertaken as part of a business pursuit which cannot be supported as a result of the professor's delusions. Spears v. Shelter Mut. Ins. Co. 2014-1191 (La. App. 3 Cir. April 1, 2015).

 Current ISO and AAIS Exclusions and Exceptions

 In the homeowners 2000 and subsequent 2011 program, ISO revised the definition of business and the exclusion. Now, “business” means:

 a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or

b. An other activity engaged in for money or other compensation, except the following:

(1)One or more activities, not described in (2) through (4) below, for which no “insured” receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;

(2)volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;

(3)Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or

(4)The rendering of home day care services to a relative of an insured.

 It appears, therefore, that many activities heretofore excluded, such as a hobby which generates a bit of money, will not fall outside the definition and therefore be covered. In theory, an insured engaging in home day care would be covered so long as the income derived is no more than $2,000. (But note that many states' mandatory endorsements exclude coverage for this activity.)

 The ISO 2011 forms business pursuits exclusion reads:

 Coverages E and F do not apply to…