The insured who is an oriental rug cleaner had a claim during the cleaning process at their premises. The loss occurred during the cleaning process where the rug was hung to dry from wooden pegs that have a small steel pin as part of the mechanical process that managed to weep some moisture associated w/ some rust from the steel pin that damaged/stained the rug.
The claim has been denied on both the property and liability sides. Insured has endorsements IM 7550 Z 06 04 Bailee Customer Floater coverage Dry Cleaners and Laundry Form. WB 1166 04 14 Voluntary Property Damage Coverage BP0003 0713 Businessowners coverage form
Please see attachment of our review.
Virginia Subscriber
According to the policy provision, the loss would be excluded. You cite this as being a gray area; however, even though the rug was hanging to dry after laundering that would be part of the insured's processing operations. When a term is undefined in a policy, we go to the standard desk reference. Merriam-Webster defines "process" in part as:
2.a.: to subject to a special process or treatment (as in the course of manufacture or film development) b 91): to subject to or handle through an established usually routine set of procedures
Using this definition we think it is accurate that cleaning of the rug would include the drying process and as such the rug hanging was part of the processing of the laundry function.
We unfortunately do not see coverage for this loss in the forms you provided.