Business Pursuits Exclusion in Arizona

Arizona law defines a "business pursuit" as follows:

To constitute a business pursuit, there must be two elements: first, continuity, and, secondly, the profit motive; as to the first, there must be a customary engagement or a stated occupation; and, as to the latter, there must be shown to be such activity as a means of livelihood, gainful employment, means of earning a living, procuring subsistence or profit, commercial transactions or engagements.

Indus. Indem. Co. v. Goettl, 138 Ariz. 315,319 (Ariz. Ct. App. 1983) (quoting Krings v. Safeco Ins. Co., 6 Kan. App.2d 391, 393 (1981)). CMLP has identified no Arizona cases interpreting this test in the context of online publishing out of the home (or elsewhere).

Arizona appellate courts have interpreted the category of business pursuits in a variety of contexts. For example, the Court of Appeals of Arizona has held that childcare services operating out of the insured’s home fell within the exclusion where the insured regularly babysat at least five children, had advertised her babysitting services in the newspaper, kept regular weekday hours, and was paid for her services. Farmers Ins. Co. v. Wiechnick, 166 Ariz. 266 (Ariz. Ct. App. 1990). In another case, the Court of Appeals of Arizona held that the activities of Humberto B. “Smokey” Santillo, Sr., selling herbs and nutritional advice, constituted a business pursuit. Fimbres v. Fireman’s Fund Ins. Co., 147 Ariz. 75 (Ariz. Ct. App. 1985). The Court noted that by selling a prescription for herbs, Smokey’s activities “originated from, grew out of, flowed from and had a connection with his regularly conducted business.” Id. at 77.

Therefore, if you live in Arizona, you may be in danger of losing coverage for your online publishing activities if you make money from your website or blog, such as through advertisements or a tip jar, unless those activities are temporary or sporadic.

Note that specific language in a policy might lead a court to a result different from the overall state trend.


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