Garage Policy and Applicable Deductible

We write a commercial garage policy for a motorcycle dealership. The insured has comprehensive physical damage coverage with a $1000 per occurrence/$5000 aggregate deductible, and a $1000/no aggregate deductible for the perils of wind and hail damage.

The question has been raised: all of the motorcycle inventory is held inside the building. A tornado wipes out the building, damaging the motorcycles inside. Would the damage be addressed using the $5000 aggregate deductible because the motorcycles were damaged by the building falling on them; or would the no aggregate deductible apply because of the damage being from the wind?

Kansas Subscriber

The answer depends on what caused the damage. If it is shown that the motorcycles were damaged by wind, the $1000 deductible applies. But, if the damage was done by the collapsing building or roof, the $5000 aggregate deductible applies.

The report of the claims adjuster should be able to definitely pin down the cause of loss, but in our opinion, if the building or roof fell on the motorcycles, that is the direct cause of loss. The wind storm may have caused the building to collapse, but that is not the proximate cause of loss to the motorcycles. If the tornado had lifted the motorcycles out of the building and blown them all over the countryside, that is a wind loss. But, a motorcycle being crushed by a falling building or roof is just that, not a wind loss.