Babysitting Subject To Liability Exclusion

Personal Liability	Injury
Business Related	Exclusion

This case is timely because of the pressing need on the part of great numbers of young employed people for daytime care for their children during working hours and the resulting opportunities for others to earn money at home by providing the needed care. One such babysitter carried a homeowners policy that included the following standard "business pursuits" exclusion:

"Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage: . . . . arising out of business pursuits of any insured. . . . This exclusion does not apply to (1) activities which are ordinarily incident to nonbusiness pursuits. . . ." The term "business" was defined in the policy to include "trade, profession or occupation."

While the insured was babysitting six or seven children in her home, for which she received payment, one of the children was seriously injured, allegedly at the hands of another, at a time when all of the children were unsupervised. In the course of litigation initiated by the injured child's parents, the babysitter's homeowners insurer filed a motion for summary judgment. The trial court concluded that the policy did not provide personal liability coverage for the incident and sustained the motion. The judgment was appealed.

On appeal, the parents argued that the trial court erred in ruling that the "business pursuits" exclusion applied to babysitting. They maintained that the exception to the exclusion applied because child care is ordinarily incident to nonbusiness pursuits. They also said that ambiguous policy languages must be construed most favorably to the insured.

The homeowners insurer responded that supervision of children for compensation is ordinarily a business pursuit, and the insured was committed to such responsibility when the incident occurred.

The appeal court cited Krings v. Safeco Ins. Co. of America, 6 Kan. App. 2d 391, 628 P.2d 1071 (1981), in which it held, in pertinent part, as follows:

"A business pursuit is constituted of two elements: continuity and profit motive. As to the first, there must be a customary engagement or a stated occupation; as to the latter, there must be shown to be such activity as a means of livelihood, gainful employment, procuring subsistence of profit, commercial transactions or engagements."

The court found from the record that the insured had been providing babysitting services for about five years and charged six to eight dollars per day per child. Her tax return for the year the injury occurred listed "child day care" as her principal business. It showed gross receipts from babysitting of $4,025. Babysitting was listed as a source of household income by her and her husband.

The appeal court concluded that there was no error on the trial court's part in holding that the "pursuits exclusion" applied. It cited Heinson v. Porter, 244 Kan. 667, 772 P.2d 778 (1989), in which the Kansas Supreme Court rejected a trial court's conclusion that the exclusion and exception are ambiguous. Applying the reasoning and guidelines established in the case, the appeal court held that the day care operation conducted by the insured in the case under review was a business endeavor.

The trial court's judgment was affirmed in favor of the insurance company and against the parents of the injured child.

Editor's Note: Many insurers offer, by endorsement of their homeowners policies, protection against third-party claims that is needed by those who provide child care in their homes for a fee. Companies affiliated with the American Association of Insurance Services (AAIS) attach Care Provided for Others Coverage ML-157. Those identified with the Insurance Services Office add Home Day Care Coverage Endorsement HO-323. Inquiry about income-producing activity at home may establish the need for such endorsement.

Susnik Et AL., Appellants v. Western Indemnity Company, Inc., ET AL., Appellees. Kansas Court of Appeals. No. 63,027. September 22, 1989. CCH 1990 Fire and Casualty Cases, Paragraph 2695.