Property damage coverage may not be available for personal property or contents when the insurance policy in question lacks an Additional Coverages. (ALM Media archives) Property damage coverage may not be available for personal property or contents when the insurance policy in question lacks an Additional Coverages. (ALM Media archives)

Question: I have attached a Condominium Renters policy sent to me by Geico, underwritten by American Bankers Insurance.

The policy states that it covers personal property, but does not mention improvements

When there is no mention of “improvements” in the policy, would the personal property coverage still cover the improvements made by the tenant or would coverage for improvements need to be specifically mentioned?

— Hawaii Subscriber

Answer: In your policy under Additional Coverages, it has section 10, Building Additions and Alterations. This is designed to provide coverage for improvements or betterments made at the expense of the insured to the parts of the premises used exclusively by the insured. This is where you find coverage for anything the tenant modifies to the actual building itself.

Coverage for contents alone, if the policy did not have the Additional Coverages section, would not provide coverage. Contents are movable property; anything permanent to the building becomes part of the building once the resident leaves.

How to classify fixtures and additions

Question: I am involved in a loss where the landlord supplied movable partitions, which are hard wired into the building. They were damaged by a covered cause of loss, but here is insufficient contents coverage to cover them.

We are attempting to claim these partitions as building items under the commercial property coverage, which is provided by form CP 00 10 06 95.

This form defines building as:

Building, meaning the designated building or structure at the premises described in the Declaration, including:

  1. Completed additions;
  2. Fixtures, including outdoor fixtures;
  3. Permanently installed machinery and Equipment.

We believe that the modular workstations are permanently attached fixtures because they are hard-wired into the walls. An electrician in addition to an installer is required to set up and/or remove these items, and sheet rock repairs would need to be made after removal. 

 — Massachusetts Subscriber

Answer: The commercial property form CP 00 10 states that fixtures are covered as either building or business personal property. Fixtures is not a defined term. The 1991 version of this form stated that, under building coverage, the fixtures had to be “permanently installed.” However, that wording was dropped with the 1995 form, leaving the undefined fixtures covered under both building and business personal property.

However, inherent in your description of these fixtures is their attachment to the building. Since these units are hard wired into the building, and some wall damage would occur to remove them, we believe they could be covered as building under the commercial property form.

Anattched air conditioning units stolen during construction

Question: The insured has an existing, insured commercial building. He is turning part of the building into a coffee shop. As part of this project, he had three commercial air conditioning units, as yet unwired and unattached to the building, set into position in preparation for hookup. They were stolen.

The policy defines “covered property” under the definition of “building” as follows: “If not covered by other insurance: Materials, equipment, supplies, and temporary structures, on or within 100 feet of the described premises, used for making additions, alterations, or repairs to the building or structure.”

The company denied the claim due to an exclusion that states, “We will not pay for loss of or damage to: Building materials and supplies not attached as part of the building or structure, unless held for sale by you, caused by or resulting from theft.”

The term “materials, supplies, and equipment” is not defined in the policy. As such, we believe they should be construed by their common meaning. The exclusion bars coverage for materials and supplies but not equipment. We believe anyone remarking upon these air conditioning units would utilize the term equipment, not materials or supplies. If they were on fire or fell off a truck, an observer not knowing specifically what the items were would almost certainly describe them generically as equipment. Thus we believe the claim should be covered.

— Ohio Subscriber

Answer: The air conditioning units would not be considered equipment actually used for making additions, alterations, or repairs to a building. An example of equipment used to make alterations or repairs would be a backhoe used to dig the foundation of an addition. The air conditioning units were just equipment waiting to be installed. Yes, we agree that they would be considered equipment, but not yet permanently installed, so not covered under the building coverage. They could be considered business personal property.

See also: The top 100 P&C insurance groups in 2017