We are looking for an opinion on this coverage scenario. We have a sawmill that sustained a fairly significant fire to their mill. The concrete floor of the mill also serves as foundation for the structure and permanently installed machinery. The CP 00 10 10 12 form, has the following exclusion:
•g. Foundations of buildings, structures, machinery or boilers if their foundations are below:
o(1) The lowest basement floor; or
o(2) The surface of the ground, if there is no basement;
We have argued with the carrier to try and cover some of the concrete as building as it serves as the floor of the sawmill and as a foundation for permanently installed machinery (concrete is above the surface of the ground). How do you read the interpretation of the above language? Foundations of buildings are completely excluded or only if the foundations are below 1 or 2 in the exclusion. There is no basement at the mill.
When a policy term is undefined, we must go to its common meaning as found in a standard desk reference. Merriam Webster defines foundation in part to mean:
4 : an underlying base or support - especially: the whole masonry substructure of a building
5 a:a body or ground upon which something is built up or overlaid
Then we look to a definition for surface in reference to the surface of a building, which Merriam Webster defines in part as:
1 : the exterior or upper boundary of an object or body
on the surface of the water
the earth's surface
surface - adjective:
1 a : of, located on, or designed for use at the surface of something
b : situated, transported, or employed on the surface of the earth
surface mail
surface vehicles
Analysis:
If the concrete surface is directly positioned, or attached, to the ground, then the foundation is not below the surface of the ground, but upon it. Further, if the concrete is serving as a floor then it is part of the building or structure.
An example of the type of foundations the exclusion applies to would be a mine, or a cellar, both of which are below the ground's surface.