Business License Lapse May Save Insurer from Covering Claims

Business License Lapse May Save Insurer from Covering Claims

On November 8, 2022, Beazley Underwriting Ltd. filed an amended complaint.  The insurer asked the court to find it did not owe coverage to Jumper Man Party Rentals under an “event liability claims made and reported” insurance policy for alleged bodily injuries arising from an overturned “trackless train” at a birthday party in Henderson, Nevada, in April 2021. [i]


Factual Background

On April 30, 2021, Josh Zwagil hosted a birthday party at his home in Henderson, Nevada.  Jumper Man supplied a “trackless train” for the party.  Four members of the Zwagil family and five members of another family boarded the train and arranged themselves behind the attendant in the “trackless train’s” three cars.  The train allegedly rolled over and crushed several of its occupants after Jumper Man’s driver decided to take the train down a steep decline.[ii]

In May 2021, after the alleged incident, Jumper Man received an email from the birthday party’s host requesting the business’ insurance information.  Later that month, counsel for the injured parties issued a demand letter on behalf of the two claimants, which alleged that damages exceed $75,000.


The Lawsuit

This is an action by the insurer concerning the rights and obligations of the parties under the event liability claims made and reported insurance policy issued to Jumper Man for the July 2020 to July 2021 policy period in connection with bodily injury claims arising out of the April 30, 2021 event.[iii]


Legal Standard

Henderson municipal code provides that “[i]t shall be a violation of the provisions of this title and unlawful for any person to commence, carry on, engage in or continue in the city any business without first obtaining a license and paying the appropriate license fee as provided by terms and provisions of this title.” [iv]


Key Policy Terms and Conditions

      1. “Underwriters (Insurer) will pay on behalf of the Insured, Damages and Claims Expenses because of any Claim or Claims for Bodily Injury or Property Damage to which the coverage applies caused by an Accident.”[v]
      2. Insurance only applies in specific circumstances listed in the policy.[vi]
      3. “It is a condition precedent to the coverage that the facilities of the Named Insured and any Insured requiring a license to practice or carry out any event shall be licensed in accordance with all relevant federal, state and local requirements. The Named Insured warrants that as of the inception date of this Policy it has secured all relevant licenses.”[vii]
      4. Insured warrants that it:
        1. “…observes and complies with the requirements of any law, ordinance, court or regulatory body of whatever jurisdiction, and ensures that all necessary contractual arrangements have been made and confirmed in writing (which shall include, but not be limited to, the obtaining of licenses, permits, visas, copyright and patents) are obtained in a timely manner and valid for the period of the covered activity.”[viii]
      5. “The Insurer agreed to defend Jumper Man in connection with Bodily Injury Claim, subject to a full reservation of rights under the policy, including all rights to recoup defense costs to the extent there is no coverage under the Policy for the Bodily Injury Claim.”[ix]


Relief Sought

The insurer sought judgment declaring first, no coverage is afforded under the policy for the bodily injury claim; and second, there is no duty to defend or indemnify Jumper Man under the policy in connection with the bodily injury claim.  The insurer argued it is entitled to declaratory relief because, pursuant to the policy which Jumper Man accepted, Jumper Man warranted, among other things, it observed and complied with all legal requirements of the jurisdiction it operated in and obtained all necessary licenses, permits and other authorizations for its operations.[x]  Jumper Man was required to maintain a business license with the city of Henderson in order to carry out the April 30, 2021 event.  When the event occurred, Jumper Man’s business license with the city of Henderson had expired as of October 31, 2020.  Because of the expired license, the insurer contended that it had no duty to defend or indemnify Jumper Man under policy sections XXX and XXXIII.[ix]

Finally, the insurer sought judgment awarding the amounts paid in defense of Jumper Man in connection with the bodily injury claim.[xi]  The insurer asserted because no coverage is afforded under the policies for the bodily injury claim pursuant to sections XXX and XXXIII, the amounts paid by it in defense of the claim are not and were not owed by the insurer under the policy.[xii]  Therefore, it would be unjust and inequitable to allow Jumper Man to keep the benefit of amounts paid under the policy for which it was not entitled, and the insurer is entitled as a matter of law and equity to recoup payments under the policy for Jumper Man.



Businesses which require permits or licenses from the city in which they conduct business should ensure all local requirements are satisfied before commencing, carrying on, engaging in or continuing operation to avoid violation of insurance policy agreements.  Before an insurer pays for an insured’s defense, it should carefully evaluate the terms and conditions of the policy and circumstances of the claim.  This will prevent unnecessary lawsuits to recoup payments for a defense the insurer is not required to cover.

Fiona Murphy co-authored and is a law clerk in Tyson & Mendes’ 2022 clerkship program.




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[i] Emily Enfinger, Insurer says Party Co. not covered for ‘trackless train’ injuries Law360 (2022), (last visited Nov 13, 2022).

[ii] Am. Compl. at 3:7-16, Beazley Underwriting Ltd. v. Jumper Man Party Rentals, LLC.

[iii] Id. 2:21-27

[iv] Henderson, NV, Municipal Code §4.04.020 (a)

[v] Insuring Agreement. Bodily Injury and Property Damages, Am. Compl. at 3:7-16, Beazley Underwriting Ltd. v. Jumper Man Party Rentals, LLC.

[vi] Insuring Agreement. Bodily Injury and Property Damages, Am. Compl. at 3:7-16, Beazley Underwriting Ltd. v. Jumper Man Party Rentals, LLC.

[vii] Policy Section XXX. Licensure, Id. 5:25-6:3

[viii] Policy Section XXXIII. Warranties, Id. 6:21-7:3.

[ix] Id. 7:12-16.

[x] Id. 7:20-11:8

[xi] Id. 3:1-5

[xii] Id. 11:13-12:12.