Direct Physical Loss under BOP

June 27, 2011

Our insured accidentally threw away some digital x-ray sensors in the trash. Now, they want to be compensated for them. The BOP policy, Section I Property, Coverage agreement states, “We will pay for direct physical loss….”

I believe the coverage agreement precludes coverage as this is not “direct physical loss”. Nothing happened to them- they were simply thrown away.

Do you believe coverage exists?

Oregon Subscriber

There is no exclusion that applies to this loss. There does not need to be any impact on or damage to the items themselves for there to be a direct physical loss—just like when items are stolen. But, there is a loss in that they are no longer available to the insured.