On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.
Before Judges Brody, Stern and Keefe.
The opinion of the court was delivered by
This appeal requires us to decide whether a homeowners' insurance policy issued to Philip and Barbara Boyce by Prudential Property and Casualty Insurance Company, covered injuries sustained by plaintiff Gregory Carroll while Mrs. Boyce was babysitting for the child in her home. Mrs. Boyce was paid $85 per week by Gregory's parents (also plaintiffs) for her services. In the declaratory judgment action commenced by the Boyces when Prudential denied coverage, the carrier contends that as Mrs. Boyce was engaged in a "business pursuit," a policy exclusion applies. Plaintiffs, as assignees pursuant to a settlement of the Boyces' interest under their policy, contest application of the exclusion, but argue that even if it applies an exception to the exclusion relating to conduct "ordinarily incidental to non-business pursuits" requires coverage here. Judge Florence Peskoe held that the policy provides no coverage and granted summary judgment for the carrier. We affirm.
The Boyces' homeowners' policy reads, in pertinent part, as follows:
1. Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to bodily injury or property damage:
(a) which is expected or intended by the insured;
(b) arising out of business pursuits of any insured. . . .
This exclusion does not apply to:
(1) activities which are ordinarily incident to non-business pursuits;
"Business" is defined to include "trade, profession or occupation.
To determine whether babysitting is encompassed within the "business pursuits" exclusion, two factors must be considered. The first is whether the pursuit involves "continuity, or customary engagement [by the insured] in the activity." The second involves whether the activity involves a "profit motive" or whether the insured engages in the pursuit "as a means of livelihood, a means of earning a living, [or] procuring subsistence or profit . . . ." Sun Alliance Ins. Co. of Puerto Rico, Inc. v. Soto, 836 F.2d 834, 836 (3rd Cir. 1988), citing Frankenmuth Mutual Ins. Co. v. Kompus, 135 Mich.App. 667, 354 N.W.2d 303 (Mich.App. 1984); State Farm Fire & Cas. Co. v. Drasin, 152 Cal.App.3d 864, 199 Cal.Rptr. 749 (Cal.App. 2 Dist., 1984); Camden Fire Ins. Ass'n v. Johnson, 170 W.Va. 313, 294 S.E.2d 116 (W.Va. 1982).
It is undisputed that Mrs. Boyce was compensated an average of $85 per week from September 1986 through February 1987 to care for Gregory Carroll from 7:30 a.m. to 4:30 p.m., Monday through Friday. Gregory was between six and ten months old at the time. The "continuity" of Mrs. Boyce's work was clearly established. Plaintiffs contend, however, that "babysitting a single child in one's own home, as an accommodation to a neighbor and to provide a playmate for one's own child" is not a "business."*fn1 However, Mrs. Boyce also cared for another child for compensation during part of that period. In any event, while babysitting on a single occasion, or even occasionally, or without compensation generally does not involve a business pursuit (see Crane v. State Farm Fire & Cas. Co., 14 Cal.App.3d 727, 731, 92 Cal.Rptr. 621, 623 (Cal.App. 1 Dist., 1971), rev'd 5 Cal.3d 112, 95 Cal.Rptr. 513, 485 P.2d 1129 (1971)), here the compensation was such as to render the exclusion applicable. See Stanley v. American Fire & Cas. Co., 361 So.2d 1030 (Ala. 1978) ($3.00 per day held to be sufficient compensation for "business pursuits" exclusion to apply). See generally Annot. "Construction and Application of 'Business Pursuits' Exclusion Provision in General Liability Policy," 48 A.L.R.3d 1096, 1099-1102 (1973). "We are not here dealing with a temporary or casual keeping of children, but rather with a ...