Here's Two 'FC&S Questions' For Readers

This months musing is devoted to two loss scenarios that, at the very least, may provide a chuckle, if not insight into the coverage situation.

In this column, Im going to pose the questions and frame the issues. Im asking our agent and adjuster readers (and anyone who wants to step up to the plate) to give some thought to the coverage issues, respond via e-mail to me (fcs@nuco.com), and well take up the answers in next months “FC&S Answer.”

So this month, its just the tease–the “FC&S Question.” If theres enough response, well start a thread on our Web site for subscriber interaction. So check FCS.nuco.com, log onto the message board, and participate. Or just want until next column.

In the first case, a friend borrowed a neighbors mini-van. He backed it up to his garage, raised the lift-gate door, and was unloading the familys luggage from the van. The lift-gate was under his overhead garage door.

A door-to-door salesman came to the house. He was directed to knock at the door leading from the garage to the kitchen by the friends wife.

The salesman walked to the back door and pushed what looked like a doorbell button. But it was the button for the garage door opener (theres your first chuckle).

The garage door came down on the vans open lift-gate and did $1,200 in damage (not quite so funny). The salesman, figuring a sale was not in his immediate future (your next chuckle), left abruptly, without giving his pitch (or his name).

The friend turned the claim into his homeowners insurer, who denied it based on the homeowners policy motor vehicle loading and unloading exclusion.

The friend then turned to his own auto insurer, only to be denied based on the fact that an insured, for personal auto policy liability coverage, includes “any person using your covered auto,” and there is no coverage for any insured for property damage “used by; or in the care of” that insured.

The next stop would be the owners own PAP, but, to make things interesting, suppose the owner carries liability coverage only–no physical damage to your property coverage.

So where–in the policy or in equity (“fairness”)–is coverage for this loss to be found? Or, is there no coverage (meaning better be careful loaning mini-vans to neighbors)?

Our next homeowners/auto coverage conundrum involves tires unattached to any auto, but still quite capable of doing significant damage.

On a brisk fall day, the insured was intending to change from his regular to snow tires and had brought the tires from the garage to the driveway. Actually, he rolled the tires out of the garage and aimed them at the driveway.

He then noticed that only three tires were lying in the driveway. Oh, did I forget to mention that the insured lived on a ridge above a valley that was a mixture of woods and neighboring premises? Beautiful high ridges and lots of upscale homes in the neighborhood.

Anyway, the insured looked over the edge of the ridge and did not see his missing tire. A quick look around did not disclose its location. Cleverly, he decided that if one tire rolled over the ridge and came to rest (lost), another tire rolled over the ridge in approximately the same spot would come to rest in approximately the same place (found). So the insured let loose another tire. (You know whats coming, dont you?)

A homeowner in the valley below was surprised as he stood in his driveway washing his car when, first, a tire came out of nowhere and destroyed his doghouse, injuring but not killing his beloved pet, and next, a few moments later, a second tire bounded down the ridge, hit his autos hood and smashed the windshield. It was his hollering that alerted the higher-up neighbor as to the whereabouts of his snow tires.

Sort this one out, folks. Is coverage under the hill-dwellers homeowners policy? The personal auto policy? The valley-dwellers homeowners policy? His PAP? Is there a “stupidity” exclusion that might apply?

Well let you know next time.

***

As a final note, I want to call to your attention two important new coverage interpretation projects by the Risk and Insurance Markets department of The National Underwriter Company (parent of both this newsmagazine and the FC&S).

Were anxiously awaiting the publication this month of “Problem Issues in CGL,” a book written by four well-recognized experts in the industry (Michael F. Aylward, Shaun McParland Baldwin, Carol Keough, and Daniel J. Langin) on four extremely vexing and important CGL coverage issues:

The role of occurrence terms in liability insurance.

Advertising injury issues, such as patent and copyright infringement, “spam” and viral marketing, and Web page banner ads.

The business risk exclusions (damage to property, damage to your product or damage to your work) and additional insureds.

The inter-relation of contractual liability and certificate of insurance issues.

Secondly, as you are aware, ISO continues to revise the oft-revised and most important CGL policy. Experts Donald Malecki (author, educator and president of Malecki & Associates, Inc.) and Arthur Flitner of the American Institute of CPCU have revised the most often cited work on CGL–entitled simply “CGL”–and we will be publishing the seventh edition of this work in October. Both of these titles are extremely significant additions to the professional material available on general liability and I recommend them to your attention.

Bruce Hillman, JD, is Editorial Director of Risk and Insurance Markets for the Professional Publishing Group of The National Underwriter Company in Erlanger, Ky. Questions and comment are invited at fcs@nuco.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 3, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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