“Business Use Exclusion” of “Your Insured Car” is Against Public Policy and is Unenforceable

In Marcus v. Hanover Ins. Co., Inc., 740 So.2d 603 (La.1999), the Louisiana Supreme Court held that a “business use exclusion” in a personal automobile liability policy which excludes coverage for damages resulting from the operation of “your insured car, in any business other than an auto business,” is against public policy and is unenforceable because it contravenes Louisiana’s compulsory liability insurance law and the public policy of Louisiana, which is to provide compensation to injured third parties. Because there was previously a split in the law on this issue, the Supreme Court further held that because the insurer issuing the policy with the unenforceable exclusion, “had no intent to thwart such law and the public policy behind it,” that the policy would be construed to provide the statutorily required minimum limits of coverage, rather than the higher limits of coverage otherwise provided by the policy.

Based on the rationale of the Supreme Court, insurers maintaining policies after the Marcus decision with an unenforceable “business use exclusion” that excludes coverage for “your insured car” should be presumed to intend to thwart the compulsory liability insurance law of Louisiana and the public policy behind it, and the actual policy limits should apply to any covered loss under the policy.

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