Analysis brought to you by the experts at FC&S Expert Coverage Interpretation, the recognized authority on analysis for the P&C industry. To find out more — or to have YOUR coverage question answered — visit the National Underwriter website, or contact the editors via Twitter: @FCSbulletins. Question: We insure a bowling alley that leases space to an individual who owns and operates a pro-shop. The pro-shop is a separate entity from the bowling alley. Our insured building suffered a total fire loss. The official cause was undetermined. There was no negligence on the part of our insured. The pro-shop owner did not carry his own insurance and is looking for coverage under Personal Property of Others in our care custody or control. Our insured had a key to the leased space, but only to access mechanicals that directly serviced the insured building. Our insured had nothing to do with any business activity related to the pro-shop, although our insured had a key to the pro-shop. Does that necessarily mean the pro-shop merchandise and equipment are under our care custody or control and would Property of Others coverage even apply to this situation?

— Michigan Subscriber

Answer: A determination of whether property is in the care, custody or control of the insured will always be very fact-specific, and may vary depending on jurisdiction. Generally speaking, however, the care, custody or control exclusion applies only in those situations where the insured has actual care, custody, or control of the property. Typically, some sort of bailee-bailor relationship will need to exist for the exclusion to apply. Courts have held that where the insured leases locked storage space to a third party, he or she does not have care, custody and control over the property of the third party within that leased space. This was because the insured had no proprietary interest in and derived no monetary benefit from the stored property (even if the insured did receive benefit from lease of space itself). Similarly, in the situation you describe of a tenant's business property, the landlord has no interest in that property. The tenant can remove his property at any time without contacting the landlord, and the landlord receives no compensation for allowing the tenant to store their property. This further demonstrates why the exclusion would not apply here.

Hard living tenant incurs move-out fees

Question: The insured is a renter of an apartment. After her term was up, the apartment complex charged her for carpet cleaning, painting, blind cleaning, and full cleaning of the apartment plus rent loss, chips to the stove, a broken refrigerator door handle, broken drip pans, and interest. She has an HO 00 04 10 00. Does any of this constitute "an occurrence"? I do not believe they were accidents. She did not maintain her apartment well and broke some things.  Also, I do not believe the rent or the interest charges would constitute "property damage."

— Connecticut Subscriber

Answer: None of this is an occurrence. It is wear and tear, and not due to any fortuitous loss. Carpets gets dirty with use, as do walls, blinds and other aspects of any apartment. That is why apartment complexes charge security deposits, so that if the apartment is not in good shape when a tenant moves out, they have the funds available for cleaning. This is the result of wear and tear, or hard living depending on the extent of the wear. There is no coverage.

Covering costs after tenant's death

Question: Last year, one of the insured's tenants was found dead in their apartment. The body was there about two weeks. A claim was reported to the insurance company, and the insured contacted a company to do the cleanup. The carrier has since denied the claim, citing the pollution exclusion. I am hoping that you had some information or documentation I can use to dispute the carrier's position that the bodily fluids are not considered a pollutant.

— New York Subscriber

Answer: Couch on Insurance 9 Couch on Ins. § 127:8 says it best: "Several courts have applied the principle of "ejusdem generis," interpreting pollution by reference to the surrounding language in order to limit the list of substances that may otherwise qualify as pollutants. Thus, although the list of substances provided in the definition may be non-exhaustive, substances not specifically mentioned must be similar in nature to the listed substances. For example, it has been held that living, organic irritants or contaminants do not constitute pollutants under the policy definition because the irritants specifically identified in the definition, namely "smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste," are primarily inorganic in nature. The homeowners form HO 00 03 05 11 does not define pollutants in the definitions. Pollutants are defined in the exclusions section as "solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed." The intent of the exclusion is to eliminate coverage from industrial products and byproducts. A human body cannot be recycled, reconditioned or reclaimed. That implies being able to reuse the materials again for the same or similar purposes. Organ donation is not recycling a human body. Nicholson v. Allstate Ins. Co., 979 F. Supp. 2d 1054 (E.D. Cal. 2013) speaks to this directly; in this case the court stated that the carrier failed to show that the standard pollution exclusion in the homeowners policy would be understood by a reasonable policyholder to apply to bar guano and decaying bat carcasses. Exclusions are to be read narrowly, and reading the pollution exclusion narrowly puts the list of excluded items as being industrial or environmental in nature, and not the result of a natural death of a tenant.

Business income coverage for insured tenant

Question: I have an insured who is a retail auto tire dealer with coverage written on a BP 00 03. The insured leases the premises. There are underground fuel tanks on the premises; the insured does not own the tanks. The property owner owns the tanks and is now being required by the state to remove the tanks. The property owner told our insured the business would need to be shut down for two to four days while the tanks are being removed. Is there coverage for our insured, the tenant, for loss of income due to being shut down?

— Iowa Subscriber

Answer: In order to trigger business income coverage, there must be direct, physical loss or damage to the property caused by a covered cause of loss, such as windstorm or hail. In the situation you describe, removal of fuel tanks is not a covered cause of loss causing the business suspension, so the coverage is not triggered. See also:

• How to claim rental property theft or damage
• Who's liable for the property loss?
• New survey shows tenants don't understand liability issues