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Question: I insure a commercial glassinstallation contractor. The majority of what the insured keeps ontheir premises are materials that are dedicated to a specificjob/project. If the insured suffered a loss (covered peril) ofthese materials while being stored at their premises, would theinstallation floater cover the materials or would this fall underBPP?

— Georgia Subscriber

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Answer: In theISO Installation Coverage Form IH 00 73 12 13, covered propertymeans property situated as specified in the Declarations forinstallation at any described premises.

Covered property does not include property onthe insured's premises unless it is intended to be installed at thedescribed job site. It also does not include any tools andequipment. It does not include any property that has been acceptedby the purchaser, or any property in which the insured no longerhas an interest.

Based on the coverage wording, if the materials are designatedto a specific job site that is scheduled in the Declarations, thenthe installation floater should cover their loss. Otherwise, theloss would fall under the BPP as Personal Property of Others. Ifthe materials are not owned by others, but by the insured, thenthey would be “stock” or personal property owned by the insured andused in their business.

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Installation floater or builders risk?

Question: My question concerns acoverage dispute as to when coverage on an ISO installation floaterceases. In this scenario, a contractor was constructing astructure. They were hired to construct a building for alandowner. They installed 75 percent of the roof trusses to beinstalled. That evening, high winds damaged the structure. Coveragewas denied as those roof trusses were already installed and thus,coverage should be afforded on a builders risk policy at thatpoint. The floater states, “Covered property does not include a.property on your premises unless intended to be installed at anydescribed job site.”

Since these roof trusses were no longer intending to beinstalled (they had in fact been installed), coverage was notafforded. What is your opinion as to when coverage ceases on theinstallation floater and needs to be covered under a builders riskform?

— TexasSubscriber

Answer: We agree that the loss would notbe covered by the installation form. The ISO Installation Coverageform describes “covered property” as “property situated asspecified in the Declarations for installation at a describedpremises.” So, once the property is installed, it is no longer forinstallation, but is part of the building or structure, whichfalls under the Builders Risk form. When theproperty is installed is when the coverage on the installationfloater would end. If the other 25 percent of the trusses that werenot installed were also damaged, they should be covered by theinstallation floater.

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Once building materials have been installed, they are partof the building or structure, which means a loss would fall underthe Builders Risk policy. (Photo: iStock)

Installation floater and covered property dispute

Question: This concerns a disputeas to whether wiring installed by our insured, an electriciancovered by an installation floater, is covered property. The insured was installing wiring in an apartmentbuilding under construction when, unknown to him, the wires inseveral of the apartment units were cut, perhaps by vandals. Thewires were then refastened to the studs so that the cuts werehidden behind the fastening clips. The damage was not discovereduntil the electricians began their finishing work and theapartments had already been sheet rocked and painted.

The insurer is taking the position that the property thatwas damaged belonged to the general contractor and not to our insuredsince it was installed. We believe that the floater language makesthe wiring the property of the insured. The floater defines coveredproperty as “materials (including labor) and supplies … to be usedin the installation … while at a job site and intended to become apermanent part of the project ….” Since the insured's installationwork was not completed when the loss occurred, we contend that thedamaged property fits this definition. What is youropinion?

— SouthDakota Subscriber

Answer: Covered property and property notcovered in an installation floater are described in the floater.The insured's materials, supplies and equipment that will be (andare being) installed in a project are covered property; propertynot being installed, like buildings, land or completed projects arenot covered property. Coverage under an installation floater isvery broad; that is, coverage is on an open perils basis, subjectonly to the exclusions listed on the policy. Since there seems tobe no dispute that this was a covered cause of loss, the questionof whether the wires are covered property is crucial to thecoverage issue.

The insurer appears to be taking the position that property isno longer covered property once it has been used in an installationat the job site. That is far too strict a reading of the definitionof covered property, and it is in opposition to the followingcrucial aspect of an installation floater.

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The floater has a provision that describes when the insuranceends. That clause notes that the insurance ends at the earliest ofthe following times: the policy expires or is cancelled; thepurchaser accepts the covered property; the insured no longer hasan insurable interest in the covered property; the insured abandonsthe installation project with no intent to complete it; the projecthas been completed for more than thirty days; or the coveredproperty is put to its intended use. You stated that the insuredwas not finished with his work and was actually testing the wiringwhen the damage was discovered. Clearly, the general contractor (orthe building owner) had not yet accepted the work of your insuredas a completed operation, the wiring was not put to its intendeduse, and none of the other events had occurred. So, the insuranceunder the installation floater had not ended.

Based on the facts that the insurance had not yet ended and thatthe insurer has narrowly interpreted a definition that canreasonably be seen in a different way, we believe that theinstallation floater would apply to this claim.

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Installation of carpeting over hardwood

Question: I have a coverage question that has arisenwith a partial loss house fire on an AAIS Form HO3.The home was an older dwelling that had hardwood floors original tothe house that had been covered by wall-to-wall carpet. Allhardwood flooring was ruined due to the water used to extinguishthe fire. The insured is demanding that we lay new hardwoodflooring throughout the house and install wall-to-wall carpetdirectly on top of the new hardwood flooring. At first glance, thisseems ridiculous because we do not want to install two finishlayers of flooring (not to mention the fact that we would benailing tack strips into that new hardwood flooring to install thecarpet). However, after some reflection, I understand the insured'spoint of view. The house would potentially have a lower valuewithout hardwood flooring, and both flooring surfaces were in placeimmediately prior to the loss.

I cannot find any policy language that would speak to thisissue, other than the fact that carpet would be depreciated to ACV.Do you know of any exclusion or policy language that would speak tothis issue? It seems logical that we would not have to install morethan one finish layer of flooring (or any other surface in thehome, for that matter). However, barring policy language orprecedent, I cannot find any basis for denying the request for bothhardwood flooring and carpet.

Thanks for any thoughts you may have.

— PennsylvaniaSubscriber

Answer: There is nothing in the AAISpolicy that precludes restoring the insured's hardwood floor thenputting wall-to-wall carpet over it. It is what he had before theloss, and in order to properly indemnify him he is entitled to bothhardwood and carpet. Many people add wall-to-wall carpet foraesthetic purposes or warmth. The insured is not gaining anythinghe did not already have, although it is two finish layers.

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