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Additional or Replacement Auto

Q: Our insured has a personal auto policy withthree vehicles listed. On Nov. 6, 2013 she purchased a 2005 Pontiacwhich was meant to replace listed vehicle number one on her policy,a 1997 Monte Carlo. The agent contends the insured had a buyerlined up for her Chevrolet Monte Carlo and had every intention ofselling that vehicle. The registration plate was transferred fromthe Monte Carlo to the 2005 Pontiac. The insured did not sell theMonte Carlo that was on her policy as the sale fellthrough.

We consider the 2005 Pontiac a newly acquired auto as it did notreplace a vehicle on the policy since the insured still hadpossession of the 1997 Monte Carlo. The vehicle was not reported tous within 14 days per the policy requirements.

The insured's agent considers this a replacement vehicle becauseit was intended to replace the 1997 Monte Carlo. He furthercontends, because of this change of registration, the insured wasnot legally able to drive the Chevrolet and as such the 2005Pontiac should be considered a replacement auto.

Can you offer an opinion on whether you feel this is anadditional or replacement auto based on the facts above?

PennsylvaniaSubscriber

A: It is our interpretation that this is anadditional auto, but it could depend on insured's jurisdiction, asthere is a split in authority on this issue. So, we took bothapproaches in coming to our interpretation, as explained below.

Courts generally hold that a vehicle is a replacement if it'sprocured after issuance of the policy and the described vehicle isdisposed of by the policyholder or is otherwise inoperable at thetime of replacement. The insured acquired the Pontiac (second auto)after issuance of the policy and before the expiration of thepolicy; however, insured did not dispose of the Monte Carlo on thepolicy because insured maintained possession of the vehicle (nodisposition) and it was not inoperable at the time of thereplacement. Jurisdictions adopting this approach include NorthCarolina and Illinois, for example.

On the other hand, some courts rely on a less-stringent analysiswhich centers on the insured's intent and conduct under thetotality of the circumstances. That camp considers whether theinsured intended the second vehicle to act as a replacement andacted in accordance with that stated intent. Those courts haverefused to find that a vehicle can't replace another vehicle basedon the fact that insured kept the covered vehicle after buying thesecond and the covered auto was not inoperable. Kansas, Alabama,and Washington are such jurisdictions. Under this approach, thebenefit of the doubt would possibly go to the insured.

Balancing both approaches, we believe that this is an additionalauto. For us, the tipping point is that the insured did not reportthe Pontiac within 14 days, per policy terms. Moreover, the MonteCarlo was not disposed of, so the insured could have continued touse it even if it would have been illegal under state law. Forthese reasons, if the Monte Carlo was still on the policy, thePontiac should be considered an additional auto since it has beenadded to the coverage.

Weight of Snow Damages Pool Liner

Q: Weight of heavy snow caused an in-groundpool cover to pull from its anchors and fall into the pool, causingdamage to the liner and loss of water within. The full extent ofdamage and repair is not known until weather permits an in-depthinspection.

The insurer denied coverage under the HO3 form, Section 1,Perils Insured Against – Coverage B–Other Structures, 2. Caused by:b. freezing, thawing, pressure or weight of water or ice to a 1)fence, pavement, patio or swimming pool.

The insurer further cites Section 1, Exclusion 1: “We do notinsure for loss caused directly or indirectly by any of thefollowing. Such loss is excluded regardless of any other cause orevent contributing concurrently or in any sequence to the loss. 3.Water below the surface of the ground including water which exertspressure on or seeps or leaks through a building, sidewalk,driveway, foundation, swimming pool or other structure.”

Our contention is that the weight of snow—not water orice—caused the cover to fall into the pool and damage the liner.The damage to the liner from this weight of snow caused water toleak out of the pool, requiring liner and water replacement.Potential additional damage may result from lack of weight of thewater on the pool walls to offset hydrostatic pressure from groundwater.

Is the insurer correct in denying this claim?

OhioSubscriber

A: While ice is by definition frozen water, thefact that the policy lists them separately as excluded itemsindicates that each state of water must be considered individually.Snow by definition is soft, white pieces of frozen water that fallto the ground from the sky in cold weather; precipitation in theform of small white ice crystals formed directly from the watervapor of the air at a temperature of less than 32°F (0°C). This isdifferent from both water and ice. As such, the exclusion speaksspecifically to ice and water, so only those are excluded, and notthe weight of the snow.

As far as the carrier's use of the exclusion for water below thesurface of the ground, the snow was not water nor was it below thesurface of the ground; that exclusion does not apply. The lossshould be covered.

Pollution Exclusion Applicability

Q: My insured has a CG 00 01 12 01 policy. Theinsured was hired to install new circuits for a customer. Anemployee was pulling cable and accidentally set off the firesuppression system in the customer's office. As a result, ansul wasreleased from the suppression system. The damage includes the costto refill the suppression system (with ansul) and cost to clean-upansul. Does the pollution exclusion in the CGL form apply?

PennsylvaniaSubscriber

A: The pollution exclusion is not applicable inthis instance. The premises is not one owned or occupied by theinsured and the insured did not bring the fire suppressant on tothe premises for its work. As for the cleanup costs, the pollutionexclusion states that the exclusion does not apply to liability fordamages because of property damage that the insured would have inthe absence of any request or order to clean up. In other words, ifthe insured has coverage for the property damage it caused, thecleanup part of the pollution exclusion is not applicable.