The Missouri Appellate court has upheld the validity of the business use exclusion in the auto liability policy in a recently decided case, reversing a trial court judge that had ruled the exclusion was not applicable. The insured, Sammy Woods, purchased an auto policy from Traders covering his 2016 Ford F350 Super Duty truck. Mr. Woods listed the Vehicle as a business vehicle in his tax returns, and he claimed its use as 100% business-related. The business was described in his tax returns as “cattle, chickens and dogs.” In filling out the application for insurance Mr. Woods represented to Traders that his Ford F350 would not be used for business -related activities.
On the day of the accident Mr. Woods drove the F350 to Arkansas and picked up 1,900 chickens. At the time of the accident, Mr. Woods was towing a trailer filled with the chickens. He had a barter agreement with a gentleman in Missouri to trade the chickens for a 24 ft. flatbed trailer, worth approximately $5,000.00. After the accident Mr. Woods traded the surviving chickens for the trailer, and then filed a claim with Traders for property damage to the F350.
Traders denied the claim based on its “delivery related business exclusion” which provides, We will not pay for: 1. Loss to your insured car … which occurs while it is being used in a delivery related business…” “Delivery Related Business” was a defined phrase in the policy and “means the ownership, maintenance, or use of any car, or trailer, or any other motor vehicle while being used to carry animals, persons, or property for compensation of any type…”
Pretty straight forward, right? The Southern District Court of Appeals thought so finding the Exclusion applied in that the facts were “…uncontroverted that Insured used the Vehicle to carry animals3 for compensation in that he was using the Vehicle to transport chickens that he later traded for a flatbed trailer.
The Trial Court ruled for the insured without explanation, and the Appellate Court, except for a footnote, did not spend any time on the trial court’s reasoning. Based on a review of the insureds brief and the footnote, it appears the Trial Court bought the argument that the F350 was not a “car” because in defining a “car” Traders’ policy provided “Car – means a motor vehicle with four (4) wheels mainly designed for use on public roads. Car does not include… 2. Any vehicle having more than four (4) wheels or a gross vehicle weight of over ten thousand (10,000) pounds…” The F350 had six wheels, and the insured argued the exclusion only applied to “car.” In its footnote, the Court of Appeals rejected this argument pointing out this four wheel, six-wheel argument “…fails because Insured admitted that the Vehicle was correctly listed as a car under the Policy. In addition, if the assertion were true, it would mean that the Vehicle was not insured by Travelers at all as the Policy defines an insured car as “Any car shown in the Declarations that is owned by you.”
This is a good reminder that in Missouri the Business Use Exclusion is alive and well and this case provides some good guidance to the insurer regarding the type of evidence the court looks to when deciding when the exclusion applies. Woods v. Traders Ins. Co., No. SD 38381, 2024 WL 3873092, (Mo. Ct. App. Aug. 20, 2024)