Baby-sitting may be a “business” under an insurance policy exclusion and a word on ambiguity (US)

In a tragic incident, a baby-sitter who received $25 per day when she provided home daycare services, was caring for a deceased infant who died while in her care from bedding asphyxia.  It was held that the baby-sitter did not have cover under her insurance policy which excluded liability for bodily injury “arising out of or in connection with a business engaged in by the insured”.  “Business” included a “trade, profession or occupation”.

An endorsement provided that if the insured “regularly provides home daycare services … and receives monetary or other compensation, that enterprise is a business”.  A court held that neither the word “regularly” nor “compensation” were ambiguous.  The care services provided by the baby-sitter were regular and she was paid for those services.  The policy covered the insured if the compensation was “reimbursement”.  It was not reimbursement because it was an amount paid for services and not for reimbursing expenses.

Ambiguity requires that the words are reasonably susceptible to multiple interpretations. A word is not ambiguous because the parties say a word is ambiguous.  There was no ambiguity in the wording.   The regular and compensated home daycare services qualified as a business under the relevant exclusion.

Liberty Mutual Fire Insurance Co v Kacy Clayton case no. 21-1665 US Court of Appeals for the Seventh Circuit