According to part A.1. of the CP 04 40 endorsement – Covered Property – Covered Property means "perishable stock" at the described premises owned by you or by others that is in your care, custody, and control.

Perishable Stock is defined as: personal property: a. maintained under controlled conditions for its preservation; and b. Susceptible to loss or damage if the controlled conditions change.

Both the semen and the meat are both located at the same described premises. The semen may seem to qualify as covered property. I do not see language the specifies that Covered Property is the perishable stock that is identified in the Declarations.

With that being said, the introductory paragraph of the endorsement states, — The Coverage Form to which this endorsement applies is extended to insure against direct physical loss or damage by the Covered Causes of Loss, but only with respect to Coverage provided by this endorsement.

is this the wording in the last part of the above paragraph the part that may point to the perishable stock in the Declarations?

Please let me know your thoughts.

PART 2 – Continuation of Q&A below dated 10/20 regarding loss of bull semen. Subscriber attached the policy Declarations which under the title Spoilage Coverage, CP 04 40, listed Description of Perishable Stock: Meat at a $10,000 limit for premium of $182. Subscriber asked if the information in the Declarations changed our answer.

Kentucky subscriber

ANSWER: We have given this substantial review and discussed it with our editorial board. We are in agreement that while the screenshot gives the impression that the items must be scheduled, the form itself does not read that way, and has contained within it a definition of "perishable stock". Likewise, the endorsement does not refer to the dec for limitations on perishable stock. It is unclear whether the intent of the term on the dec is one of general description, or a true limitation. If it's to be a limitation, then it is too vague, and meat is a vague term. Does it include poultry, or only beef? While Merriam Webster defines meat as food, especially solid food as distinguished from drink; or flesh of a mammal as opposed to fowl or fish, poultry is often described as having dark or light meat.

Because of the enormous ambiguity here, we're going to give the insured the benefit of the doubt and stick with the definition of "perishable stock" as described in the form. If the insurer wants to claim that the semen is excluded, it's going to have to show where that exclusion lies.

Bear damage

QUESTION 2

This is a question about efficient proximate cause. The claim scenario is covered fire damage resulting in loss of power to the insured residence. Due to loss of power the refrigerator/freezer defrosted and juice from frozen food leaked onto the wood flooring under the fridge and caused damage. Also, due to the odor a bear purportedly caused damage to the exterior of the home to try to get to the odor. Coverage has been afforded for the damaged flooring and attributing the damage to the fire peril (proximate cause). In your opinion, would the efficient proximate cause of the damaged exterior be fire and thus covered? The policy does no cover damage caused by wild animals but does, of course, cover fire damage.

California subscriber

ANSWER:

You have an interesting situation. The efficient proximate cause statute reads as follows:

An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.

While it sounds like a stretch that fire would be the proximate cause of a bear damaging the dwelling, it's a known fact that bears will leave an area during a wildfire, and because of a bear's need for food to store up fat for hibernation, bears are always hungry and looking for food.

Football tickets

QUESTION 3

We have a client who purchases football season tickets in their business name and provides them to a client. They had a question. If a client who the insured gave their tickets to was hurt at a game, would the ISO general liability policy provide defense and protection if they were named in a lawsuit? There was a recent incident after a Pittsburgh Steelers game where a fan fell from the escalator and was severely injured. Our client had a concern if someone using their tickets were hurt at the game that they could be sued and asked us how we believe the policy would apply. My opinion is that the CGL would not defend and protect. In my mind where is the negligence on the part of our client. Thoughts?

Pennsylvania subscriber

ANSWER:

We don't see any legal liability on the part of the insured just for purchasing the ticket and passing it along to the client. The event is not on the insured's premises, and it is not part of the insured's business operations. However, there is no exclusion in the policy that would apply, and we are not attorneys. Should the insured be named in a suit there should be coverage for the insured's defense.

Sometimes we get questions that are particularly complicated and sad, such as when there's mental illness in the family that may be related to the cause of loss.

Mental illness

QUESTION 4

I'm researching coverage of a homeowner claim that involves possible arson. The homeowners, Daniel & Paulette, are currently in the process of getting a divorce. Paulette has moved to a temporary residence while her husband, Daniel, mains at the marital home. They have no children and are the only occupants of their dwelling. There is no mortgage on the property. Their financial situation appears to be good.

Daniel suffers from mental illness and takes daily medications. The local fire investigators believe that Daniel intentionally caused the fire. Would documented mental illness void the policy exclusions for "intentional loss"? Is the act of setting the fire "intentional" when the Insured is off his medications and/or suffering from a psychological episode or breakdown? I have attached the policy provision, HO 00 03 05 11.

Is the insurance agent obligated to report the Insured's mental illness to the insurance carrier?

Massachusetts subscriber

ANSWER: You have a very complex question. An insured's mental illness would be considered personal private information, and we can't see that an insurer could require or expect such disclosures from agents, if the agent even knew of the condition. Having a diagnosed mental illness does not necessarily make one inclined to set the house on fire to our knowledge.

Another issue is whether or not a documented mental illness would override the intentional acts exclusion. Even with a diagnosed illness, that doesn't necessarily mean that the insured didn't, or can't, intend to damage property. What would be important would be the insured's mental state at the time he started the fire. If he was in some sort of mental crisis and did not know right from wrong, or due to hallucinations thought he was lighting a bonfire for the Queen and not setting fire to his house, is what would make the difference. You would need documentation from a treating physician or psychiatrist in order to make that claim.

Are the fire investigators planning on having the insured official charged with arson? If he is charged with arson he will need an attorney for defense who will also need the opinion of those medical and psychiatric experts. If it can be proved that the insured did not know right from wrong and truly did not intend to destroy the home, you might have a case for overriding the intentional acts exclusion. The problem is going to be proving your case. In order to override the intentional acts exclusion, you're going to have to prove that the insured did not intend to destroy the dwelling. As mentioned earlier, you're going to need the help of an attorney, psychiatrist and the insured's physician to try to prove your claim.

Sometimes the question seems easy enough but is more complicated than it sounds, such as when an insured may not have told the agent or company about a recently purchased vehicle.

In other instances a domestic dispute gets out of hand:

Domestic dispute

QUESTION 5

During a divorce, the wife moves out of their marital home. The husband intentionally sets the house on fire. Is the Wife covered under their existing HO-3 Policy?

We feel coverage is available to the Wife per a recent Massachusetts Court ruling in the case of Aquino vs. United Property & Casualty Company 2020.

Do you agree and are there any other supporting cases?

Thank You,

Massachusetts subscriber

ANSWER: In order to answer your question we need some more information. Who is the named insured on the policy, who is listed on the deed to the property, and when did the wife move out? The standard ISO HO 00 03 only provides coverage for spouses if they are a resident of the household; if she'd moved out, she was no longer a resident, and therefore no longer an insured, even with the severability of insureds clause. What policy is this insured under, and does it have the same resident spouse requirement? We found some older cases that agreed with the insurer that there was no coverage for the innocent spouse when the other spouse sets the house on fire. In Theriault v. Mut. Fire Ins. Co., 1999 Mass. Super. LEXIS 355 an insured filed suit because a household member set fire to the house and the carrier denied the claim. The insured filed suit and the court ruled that the policy language was unambiguous and did not provide coverage for the insured's loss because the fire was set by an insured household member.

Likewise in Courtney v. Commerce Ins. Co., 1993 Mass. Super. LEXIS 279 the couple divorced and the tenancy was converted to a tenancy in common. The ex-husband was accused of setting the dwelling on fire, and the insured refused to pay the ex-wife for her share of equity in the dwelling. The ex-wife sued stating that she has no responsibility for the actions of her ex-husband. The court ruled denied her motion for summary judgment and stated that the policy unambiguously excluded coverage for loss caused by an insured, regardless of the existence of any innocent insured. Again, if the wife moved out, depending on your policy language, she may no longer be considered an insured and entitled to coverage, regardless of the policy's severability clause or any similar court cases.

Property not added to policy

QUESTION 6

We are coming in hot and heavy on the claims scenarios. Does this provide coverage for an owned trailer stolen that wasn't listed on the policy?

Have a client that bought a $15,000 trailer recently. It was stolen last night, but hasn't been added to our policy. Under the newly acquired auto section of the auto policy, would the trailer qualify?

PART 2 – See the attached email. The insured claims they advised the agency, but neither the insured/agent have any documentation of that.

Is there a duty of proof requirement for such things, I would assume?

Kentucky subscriber

ANSWER: I'm looking at the ISO PP 00 01 09 18; your policy may be different and I'm happy to look at it for you. This is convoluted, so stay with me here. I've added emphasis to make it a little clearer. "Trailer" and "newly acquired auto" are both defined terms in the policy as shown below: I. "Trailer" means a vehicle designed to be pulled by a: 1. Private passenger auto; or 2. Pickup or van. It also means a farm wagon or farm implement while towed by a vehicle listed in 1. or 2. above.

"Newly acquired auto": 1. "Newly acquired auto" means any of the following types of vehicles you become the owner of during the policy period: a. A private passenger auto; or b. A pickup or van, for which no other insurance policy provides coverage, that: (1) Has a Gross Vehicle Weight Rating of 10,000 lbs. or less; and (2) Is not used for the delivery or transportation of goods and materials unless such use is: (a) Incidental to your "business" of installing, maintaining or repairing furnishings or equipment; or (b) For farming or ranching.

A trailer is not included in the definition of "newly acquired auto", which provides a grace period for adding new vehicles. Under the physical damage section of the policy, coverage is for "your covered auto" or any "non-owned auto". The definition of "your covered auto" is: "Your covered auto" means: 1. Any vehicle shown in the Declarations; 2. A "newly acquired auto"; 3. Any "trailer" you own; or…

While "trailer" is part of "your covered auto", in the physical damage section Other than "collision" and "collision" coverages apply only if the declarations indicates that there is coverage for that vehicle. However, under exclusions, there is an exclusion for "trailers" not shown in the declarations but there is an exception to that exclusion as follows (page 10 of the ISO form) : This exclusion (7.) does not apply to a: a. "Trailer", and its facilities or equipment, which you do not own; or b. "Trailer", camper body, or the facilities or equipment in or attached to the "trailer" or camper body, which you: (1) Acquire during the policy period; and (2) Ask us to insure within 14 days after you become the owner.

Therefore, if the insured advised the insurer of the acquisition of the trailer within that 14 days of purchase, there is coverage, even though it doesn't fit under the "newly acquired auto" section. Trailers are handled separately. Let me know if you have any questions.

part 2 – How are they claiming they notified the agent? Phone call, email, text? Without proof it's the insured's word against the agent's, and there's nothing in policy language that deals with that kind of scenario, it's really a legal thing. The policy requires the insured to ask "us", the insurer, to provide coverage within 14 days of becoming the owner. Unless the insured can prove that he advised the agent of the purchase of the vehicle, it's not covered. Especially if the insured just "thinks" he told the agent but isn't sure and doesn't have any documentation. Sometimes we learn about new sporting equipment.

Motorized surfboard

QUESTION 7

Our insured purchased a motorized surfboard called a Lift eFoil. There seems to be confusion as to whether this would be covered under the homeowner liability. The insurance company "isn't sure". When we call companies who insure watercraft, they don't have a product to insure it. Does the homeowner liability provide coverage for a motorized surfboard?

New York subscriber

ANSWER:

You have an interesting question. An eFoil has a propeller and motor and can go up to 30 miles per hour. They weigh between 35 – 65 pounds and generally cost $10-12,000. Your insured may want to consider scheduling it. You could add it to the HO 04 61 Scheduled Personal Property under other property. The HO 04 65 Coverage C Increased Special Limits of Liability has been updated as of March 2022, and the new form allows an insured to increase the special limits on watercraft; the May 2011 version does not.

First, we need to determine what the craft is in relation to the homeowners policy. Under the definition of aircraft, hovercraft, motor vehicle and watercraft liability the definition of Watercraft is : " a craft principally designed to be propelled on or in water by wind, engine power or electric motor…" As the eFoils have an electric motor and are designed for use on the water they are a watercraft.

The foils generate 3,900 watts of energy, which translates to 5.22 horsepower according to the conversion table on the internet. (We are not experts in propulsion). The policy states that horsepower means the maximum power rating assigned to the engine or motor by the manufacturer, and the eFoils do not have such a rating that we can find. The horsepower is necessary since the exclusion uses horsepower as a determining factor for exclusions and exceptions.

The " watercraft liability" exclusion has exceptions for certain types of craft. Exceptions that would apply to the eFoil are as follows:

"Is not a sailing vessel and is powered by: One or more outboard engines or motors with: 25 total horsepower or less"

Since the craft is propeller driven, we are considering it an outboard motor. Therefore, the standard homeowners policy should provide liability coverage. The HO 00 03 03 22 has revised the watercraft liability section some but the exception to the exclusion for such craft is the same, so there is coverage.

The Watercraft endorsement HO 24 75 is designed for those with more than 25 horsepower, so that would not apply to this craft. The Watercraft policy WT 00 01 looks like it could fit but I suspect underwriting eligibility requires more of an actual watercraft than this.