Here is an interesting claim denial. The case is a 2022, from the Southern District of Texas, Houston Division. It is styled, Sergio and Maria Weitzman v. Allstate Vehicle and Property Insurance Company.
The Weitzman’s bottle wine in Argentina and sell it, for money, to and through their Texas company, Serca Wines, LLC. In 2019, a fire destroyed 7,727 bottles stored in Argentina awaiting shipment to, and sale from, the United States. The Weitzman’s made a claim through their homeowners policy for the loss. The policy covered personal property located away from the residence, but with a business property coverage limit of $200.00. Allstate paid $200.00. The Weitzman’s, representing themselves sued Allstate alleging the wine business is a hobby and that the bottles were personal property. They sued for the policy limits of $303,000.00.
The undisputed facts in the record, which includes the tax returns for the relevant period and a few invoices, as well as responses to written discovery, show that as a matter of law, the $200.00 policy coverage limit for business property located away from the insureds’ residence applies. Allstate’s motion for summary judgment was granted.
Pursuant to Texas Insurance Code, Section 554.002, the language of a policy exclusion or exception to coverage that the insurer claims is an avoidance or an affirmative defense. If the insurer proves that an exclusion applies, the burden shifts back to the insured to show that the claim is within an exception to the exclusion.
The policy at issue contained the following Limitations:
Limitations apply to the following groups of personal property. If
personal property can reasonably be considered a part of two or
more of the groups listed below, the lowest limit will apply. These
limitations do not increase the amount of insurance under Personal
Property Protection—Coverage C. The total amount of coverage for
each group in any one loss is as follows:
1. $ 200 – Property used or intended for use in a business while
the property is away from the residence premises. This does not
include electronic data processing equipment or the recording or
storage media used with that equipment.
The policy defined certain terms that modify coverage:
Business—means any full- or part-time activity of any kind engaged
in for economic gain including the use of any part of any premises
for such purpose. The providing of home day care services to other
than an insured person or relative of an insured person for
economic gain is also a business.
However, the following are not considered a business: . . . an
activity for which an insured person does not receive more than
$2,000 in total compensation for the 12 months before the beginning
of the policy period.
. . .
Insured person(s) means you, and if a resident of your household:
a) any relative;
b) and any person under the age of 21 in your care.
. . .
Insured premises—means . . . the residence premises . . . .
. . .
You or your—means the person listed under Named Insured(s) on
the Policy Declarations as the insured and that person’s resident
spouse.
After investigation, Allstate determined that the wine destroyed in the fire away from the Weitzmans’ residence was personal property used or intended for use in a business, which entitled the Weitzmans to $200.00 under the policy. Allstate paid the $200.00.
The 7,727 bottles of wine, worth $434,240, was stored in Mendoza, Argentina, when fire destroyed the wine. Sergio Weitzman is the owner, manager, and registered agent of “Serca Wines, LLC.” Serca Wines sells wine through its website, www.sercawines.com. The evidence is that Sergio Weitzman pays a company called the Vines of Mendoza to harvest grapes and make wine for him and his wife. As Weitzman stated at a hearing, the Weitzmans then sell the wine to their company, Serca Wines, LLC.
The evidence is undisputed that the wine is used or intended for use in a business. Under the policy, such use includes any activity for economic gain. The Weitzmans sell the wine to Serca Wines and sell the wine through Serca Wines to third parties. The wine was clearly intended for use in the Weitzmans’ business.
The business coverage limitation applies, unless the Weitzmans can prove the exception that they did not receive more than $2,000 in total compensation for the 12 months before the beginning of the policy period, including through their sales to Serca Wines or through money they received from selling the wine through Serca Wines.
The above is a general discussion of the case but more specifics are found in the opinion. This is a good read for someone who lost property and is claiming a loss is a hobby or not for business purposes.