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As we head into the holidays, people begin planning their festivities; parties are organized, guest lists are created, presents are bought, decorations are put up, and families (either by blood or by choice) are generally preparing for a celebratory time of year full of smiles and loved ones.
But the holidays don’t always go as planned. Here are some hypothetical insurance questions related to common, yet unexpected, holiday calamities.
Question: An insured was on her way to the grandparents for Thanksgiving when she was involved in an auto accident; she was the at-fault driver. Along with the bills for property damage to the other vehicle, cost of a rental car and medical expenses, we were presented with veterinarian bills for the family dog, which was traveling in the other vehicle. We don’t believe there is coverage for the dog due to the following exclusion: “We do not provide Liability Coverage for any insured for “property damage” to property owned or being transported by that “insured.” However, we are having second thoughts about the denial. Is there coverage for the dog?
Answer: We believe that your company has misinterpreted the exclusion on the auto policy and that there should be coverage for the injuries to the dog. The exclusion reads that the insurer will not provide liability coverage for any insured for property damage to property owned or being transported by “that” person. The intent of the exclusion is not to provide liability coverage for the person who is transporting or who owns the property that is damaged. In this case, your insured was not transporting and did not own the dog, so the exclusion is not applicable for the insured, who is, after all, responsible for the damage. An innocent third party had his property damaged, and the fact that he was transporting his own property or owned that property does not change your insured’s liability or the insured’s coverage under the auto policy.
Question: Our next question deals with rambunctious children. While visiting the grandparents, the grandchildren, ages 3 and 4, colored on walls, broke windows and actually tore shingles off of an appurtenant structure in the backyard. (They obviously take their vitamins!) Is the damage excluded under the intentional acts exclusion?
Answer: Most states have an age of reason below which children are seen as being incapable of knowing right from wrong. Often this age is seven, and it’s hard to make a case that even though the 4-year-old has been told not to draw on the walls that he truly understands the issue, particularly if he was drawing a picture of pilgrims or turkeys.
The intentional acts exclusion applies only if the insured committed the act with the intent to cause loss — again, at this age, did the children intend to cause a loss and really understand the ramifications of the action? We think not. It’s different than a 16-year-old setting the house on fire because he was grounded and mad at the folks.
So, as far as the dwelling itself, the coverage is open perils except for what’s excluded, and since we’ve ruled out intentional acts with children this young, there’s coverage to remove the crayon from the walls, fix the windows and even the shingles unless there’s more to this story than we know about.
Question: Next, we get into the sauce. Literally. The insured was serving her famous cranberry chutney to guests when the dog chased the cat under her feet, knocking her off balance so that she fell, spilling a gallon of cranberry chutney all over the bright white carpet. Is there coverage for the removal of the cranberry stain?
Answer: In this situation, the type of carpet makes all the difference. If the carpet is wall-to-wall, then it is part of the dwelling and covered by open perils. Since there is no exclusion under the dwelling coverage for spilled cranberry chutney, the removal of the stain would be covered. However, if the carpet is not wall-to-wall but is simply a large floor rug, that is a different story. The rug would be personal property, and as such, falls under named perils coverage. There is no named peril for spilling cranberry chutney; named perils are fire, lightning, windstorm, theft, and other such losses.
Question: Since Montana has already received a significant amount of snow, we’d be remiss without a snow removal question. Sam’s Snowplow service cleared the parking lot of a local restaurant. The restaurant owner claimed that Sam had his blade too low, damaging the blacktop. The restaurant owner wants it replaced. Is there coverage under either Sam’s Commercial Auto policy or his CGL form?
Answer: Unfortunately for Sam, there’s no coverage under the Commercial General Liability form since that form excludes coverage for autos, and the snowplow is considered an auto. There is an endorsement that would provide coverage, but we do not know that Sam had the endorsement.
Under the auto policy, damage that arises from work after the work has been completed is excluded as well. If Sam was completely done plowing the lot, there is no coverage. However, if Sam was on a lunch break when the damage was discovered since Sam had not yet completed plowing, there would be coverage.
Christine G. Barlow, CPCU, ([email protected]) is managing editor of FC&S Expert Coverage Interpretation, the authority on insurance coverage interpretation and analysis for the P&C industry.