The Maryland Court of Appeals has opined on many denial of coverage questions arising from various exclusions in homeowner’s insurance policies.  Recently, the Court was presented for the first time with a denial of coverage in a case involving a homeowner’s policy under the “business pursuits” exclusion.

In Springer v. Erie Insurance Exchange, the insured homeowner was sued for defamation by J.G. Wentworth, a structured settlement purchasing company.  The complaint alleged that the company was defamed by the insured’s maintenance of two websites, jgw-sucks.com and jgwentworth-scam.com, and by comments the insured had posted online.

Erie denied coverage and a defense for the homeowner because the insured homeowner was the CEO of Sovereign Funding Group, a competitor of J.G. Wentworth. 

The Maryland Court of Appeals ruled that the denial of coverage was insufficiently supported and sent the case back to the trial court for further proceedings.  The Court stated that an insurer can only deny coverage if, after a thorough investigation, the claim arises out of an ongoing and profit-seeking endeavor by the insured homeowner.  In other words, the insurance company must establish that the insured’s alleged conduct was based upon a continuing business interest and profit motive.

Apparently, common sense plays no role in determining the interests and motivations of the CEO of a competing business that slams the competition while working from home.