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South Carolina Farm Bureau Mutual Insurance Co. v. S.E.C.U.R.E. Underwriters Risk Retention Group11/27/2000
773 (1976).
I. Duty to Defend and Indemnify
Both Farm Bureau and SECURE appeal the order of the circuit court finding they have a duty to defend and, if necessary, to indemnify the parties in the underlying personal injury action. Both carriers contend the other is solely responsible for the defense and indemnification of the parties in the underlying action. We disagree.
A. Farm Bureau's Appeal
Farm Bureau argues the circuit court erred in requiring it to defend and indemnify the Garrisons because (1) the incident occurred on premises which were owned by the Garrisons, but not described in Farm Bureau's policy and (2) the incident arose from a business pursuit. We disagree.
Under the Garrisons' homeowner's policy, Farm Bureau agreed to "pay the necessary medical expenses that are incurred within three years from the date of an accident causing bodily injury ." The policy applied to a person off the insured location if the bodily injury " caused by an animal owned by or in the care of the insured." The policy excluded coverage where there was "bodily injury or property damage . . . arising out of business pursuits of an insured . . . arising out of a premises . . . owned by the insured . . . that is not an insured location." Relying on these exclusions, Farm Bureau maintains the homeowner's policy excludes coverage for the dog bite in this case.
" n insurer must show a causal connection between a loss and an exclusion before the exclusion will limit coverage under the policy." South Carolina Ins. Guar. Ass'n v. Broach, 291 S.C. 349, 351, 353 S.E.2d 450, 451 (1987). At the beginning of both policy exclusions sought by Farm Bureau are the words "arising out of." In McPherson v. Michigan Mut. Ins. Co., 310 S.C. 316, 320, 426 S.E.2d 770, 771 (1993), our supreme court held that "for the purpose of construing an exclusionary clause in a general liability policy, 'arising out of' should be narrowly construed as 'caused by.'" Furthermore, " here the words of a policy are capable of two reasonable interpretations, that construction will be adopted which is most favorable to the insured." Id.
No South Carolina case specifically addresses whether a homeowner's policy provides coverage for a dog bite that occurs on a business premise away from the home. However, the Missouri court addressed this issue in Lititz Mut. Ins. Co. v. Branch, 561 S.W.2d 371 (Mo. App. 1977). In Lititz, a dog was taken from the residence to the business premises of a dairy where it was tethered. Subsequently, the dog bit a child. The homeowner's policy insurer filed a declaratory judgment action alleging it did not have a duty to defend and indemnify the insured. The policy exclusions in Lititz were very similar to those in this case. That policy excluded coverage for bodily injury or property damage arising out of business pursuits of any insured and injury or damage arising out of any premises, other than the insured premises, owned, rented or controlled by any insured. The Lititz court reasoned the dog bite was the result of personal tortious conduct and was not causally related to the business premises.
Liability for injuries caused by an animal owned by an insured arises from the insured's personal tortious conduct in harboring a vicious animal, not from any condition of the premises upon which the animal may be located. Id. at 374.
We find this reasoning persuasive. The dog bite to the face of Jordan Purvis was not "caused by" any specific business pursuit of the Garrisons nor by the business premises itself. The dog bite was the result of the Garrisons' possession of an animal with a propensity to attack others. The fact that
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