Many commercial carriers seek to control their exposure by limiting coverage to a particular location or a particular business pursuit of the insured.  There have been some decisions that have expanded this coverage by finding that a seemingly non-covered loss was “incidental” to the business and therefore covered.

This issue recently arose in Am. W. Home Ins. Co. v. Donnelly Distribution, Inc., in which the insured ran a newspaper distribution business and obtained insurance for its distribution facility. The policy contained a “Premises Provision” that limited coverage to injuries arising out of the ownership, maintenance or use of the premises and “operations necessary or incidental to those premises.”

The insured was sued by a claimant who injured herself when she slipped on a plastic tie used to bind newspapers together. The injury occurred on a city street and not at the insured’s distribution facility. The insurance carrier denied coverage because the policy’s Premises Provision only provided coverage for operations that are necessary or incidental to the insured premises, not to the insured’s business operations. The Third Circuit court of Appeals upheld the denial because the use of the plastic tie was not necessary for the operation of the distribution center itself.  In sum, it found that the wording of the policy limited coverage to injuries arising out of a business location and not the insured’s business operations.