Q

Our insured has a retail store but occasionally will display some of the business personal property at a fair or exhibit. Coverage is provided on Businessowners Special Property Coverage Form, BP 00 02 12 92. How would the coverage extensions of personal property at newly acquired premises and personal property off-premises apply to the insured's property? Does it make any difference whether or not the insured signs a written agreement or lease to display at the fair or exhibit? Would “acquired premises” include leased real property in addition to owned real property?

New York Subscriber

A

First, the extension of coverage for personal property at newly acquired premises ($10,000 is the maximum the insurer will pay at each location) would not apply. “To acquire” is synonymous with “to get” – as in to get as one's own, or come into possession of or control. When an employee of the insured is displaying merchandise at a fair or exhibition with hundreds of other people from other companies, he or she has not acquired the premises where the event is taking place. However, if the insured has entered into a formal lease agreement for the rental of a building, the building would be “newly acquired” premises at the start of the lease.

The extension that would apply to personal property at fairs and exhibitions is the extension of personal property off-premises. This extension applies only if the property is in the course of transit or temporarily at a “premises you do not own, lease, or operate.” Construing this limitation narrowly (i.e., giving the insured the broadest reasonable interpretation), the insured should have coverage – even if there is a formal agreement for use of booth space. Using the narrow interpretation, the “premises” referred to means the entire real property where the exhibition is being conducted, rather than the booth space.

It should be noted that the personal property off-premises coverage applies to covered business personal property other than money and securities and that the most the insurer will pay for loss or damage under this extension is $1,000.