A Missouri appellate court ruled that equipment on a man’s trailer is not subject to the “custom equipment” coverage limit. The case is Faries v. United Servs. Auto. Ass'n, 628 S.W.3d 257 (Mo. Ct. App. 2021).
What Happened
Joseph Faries purchased a complete spray foam trailer package (spray foam trailer) from Spray Foam Systems of Georgia (SFSG) in 2014. The spray foam trailer consisted of a spray foam system, which had been assembled by SFSG using component parts from other manufacturers. The spray foam system was then permanently affixed to a trailer SFSG had purchased from Horton Haulers. Once the final “package” was fully assembled, it was sent to Faries. Faries added the spray foam trailer to the personal auto policy he had purchased from USAA and paid separate premiums for both collision and comprehensive coverage.
Two years after purchasing the spray foam trailer, it suffered extensive damage in a fire. Faries filed claims for the trailer and the spray foam equipment with USAA. The insurer determined that the spray foam trailer was “custom equipment” subject to a $5,000 limit. The policy defined “custom equipment” as “equipment, furnishings and parts permanently installed in or upon your covered auto, other than: 1. Original manufacturer equipment, furnishings or parts; [and] 2. Any replacement of original manufacturer equipment, furnishings or parts with other equipment, furnishings or parts of like kind and quality…” (emphasis added).
Faries rejected the offer, arguing that the spray foam trailer was “original manufacturer equipment” and should not be subject to the custom equipment limit. He claimed the spray foam equipment was a “component part” of the trailer and should be treated as such. The case came before a judge, who granted partial summary judgment in favor of USAA that the “spray foam trailer was ‘custom equipment’ and not ‘original manufacturer equipment’ for purposes of physical damage (i.e., comprehensive and collision) coverage.” Faries appealed.
What the Court Said
The appellate judges were not so easily convinced that the spray foam trailer constituted “custom equipment.” They noted that Faries had “purchased a spray foam system package from SFSG” (emphasis added). The Horton Hauler trailer that served as the base of that package was the only part manufactured by Horton Haulers. Faries had made no further alterations or additions to it.
USAA pointed out that the declarations page of Faries’s policy listed only the Horton Hauler trailer; there was not a separate entry for the spray foam equipment. This fact, the judges said, was not dispositive. They pointed back to the policy definition for “custom equipment”: it referred to permanently installed equipment “other than . . . [o]riginal manufacturer equipment . . . [and] [a]ny replacement of original manufacturer equipment . . . with other equipment . . . of like kind and quality.”
SFSG purchased the trailer from Horton Haulers and only the trailer. SFSG directed the manufacture of the spray foam equipment and installed that same equipment on the trailer before sending the completed package to the customer, Faries. As previously stated, Faries did not alter or otherwise make a change to the spray foam trailer after it was delivered.
Conclusion
The appellate judges reversed summary judgment in favor of USAA. The trial court was ordered to “assess damages under [Faries’s] insurance contract as the actual cash value of the spray foam vehicle less the deductible” and conduct further proceedings in a manner consistent with the appellate court’s opinion.
Editor’s Note: In this case, the trailer manufactured by Horton Haulers and the spray foam equipment made by SFSG were two parts of a greater whole. Faries ordered “a Horton Hauler trailer and spray-foam-system package” from SFSG. Horton Haulers made the trailer. SFSG purchased the trailer, then made–or directed the making of–the spray foam equipment and attached it to the trailer. Faries did not customize his order from SFSG, and he did not make any changes to the trailer once it was in his possession.
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