Q

We insure a small business under a commercial property policy, form CP 00 10 04 02, with special form causes of loss, CP 10 30 04 02. Recently, someone broke into the business at night. The insured's computer—including hard drive, monitor, and keyboard—was stolen. The insurer has paid for the theft of this equipment.

But during the burglary, the insured's free-standing hard drive and back-up tapes were vandalized. They were not taken from the premises and the vandalism damage was obvious. The insurer is refusing to pay for the vandalism damage, because they say it occurred during a theft.

As you know, the CP 10 30 contains a limitation on coverage for “valuable papers and records, such as . . .tape, disc, drum, cell or other data processing recordings or storage media and other records.” That limitation is that only the “specified causes of loss” apply to these items. Vandalism is one of those “specified causes of loss;” theft is not.

Our contention is that the theft damage and the vandalism damage can be easily recognized and separated. We believe that the vandalism to the hard drive and tapes should be covered. May we have your opinion?

Rhode Island Subscriber

A

You are correct. Just because the vandalism occurred during a theft does not make the entire loss a theft, and, as you point out, the vandalized property can easily be separated from the stolen property.