On September 15, 1996, a barn owned by Victor and Lorrain Salzi collapsed during a hurricane. The Salzis, who were insured by a homeowners policy issued by Virginia Farm Bureau, filed a claim for their loss of the barn. The insurer denied coverage when it discovered that, when the loss occurred, the barn contained thousands of bales of hay. The hay belonged to the Salzi’s neighbor, a tobacco farmer. The farmer intended to sell the hay to a customer and the Salzis let him use the barn for storage. Since the hay was for sale, the insurer’s position was that the barn was used for a business purpose, excluding it from protection under the policy.

The insured based its denial on the following policy wording:

"Coverage B does not cover:

". structures used for business"

Both of the parties requested a summary judgment and the lower court granted one in favor of the insurer and the policyholders appealed.

In appealing the decision, they re-argued the loss circumstances. They pointed out that their neighbor, a Mr. Marsten, was permitted free use of the barn in case he needed additional storage. Although he did once give the Salzis $100 in appreciation, he did not pay any rent or fees related to his access to their barn. While the Salzis acknowledged the policy exclusion, they contended that the prohibition of business use applied only to an insured’s business activity. They asked the court to construe coverage because the exclusion was ambiguous, vulnerable to more than one interpretation.

Unfortunately for the Salzis, the higher court was not as flexible. After examining the policy’s exclusion of business use as well as its definition of business, the court found the wording to be clear and quite applicable to the loss circumstances. In its opinion, at the time of loss, the barn was being used for business, triggering the business exclusion. The lower court decision in favor of the insurer was affirmed.

Victor H. Salzi et ux., Plaintiffs-Appellants v. Virginia Farm Bureau Mutual Insurance Company, Defendant-Appellee, VaSCt. No. 010438 Filed January 11, 2002. 2002 Va. LEXIS 4 Affirmed. CCH Fire and Casualty Cases Paragraph 6835