The second date of loss occurred on 8/18/2023 as a result of water. The contractor completing the repairs under the first claim did not secure the property properly allowing the water to get in. We do have subrogation potential.

The first claim the POR was determined 3 months which expired as of November 30th, 2023.

The second claim the POR was determined 5 months.

I do not feel we owe for overlap between the first and second claim -

The insured has a BOP 003 (7/13) with a 72-hr. waiting period.

We do owe for the adjustment period; in this case the insured was required to do an EUO on the second claim. An undisputed payment was released 6/25/24.

Looking to confirm if the loss of income for the second claim 12-month period begins at the date of loss, and if that is the case, appears we would only owe a total of 9 months, because the first 3 months were already paid under the first claim.

Rhode Island Subscriber

Answer:

Based on the policy language, the period of restoration for loss of business income begins within 12 consecutive months after the date of direct physical loss or damage. Since these are two separate loss occurrences, coverage is based on the merits of each loss. As such, the second loss will begin after the date of the second physical loss or damage. In the case of overlapping coverage, that will fall under the provisions of the Other Insurance condition, as follows:

H. Other Insurance
1. If there is other insurance covering the same loss or damage, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not. But we will not pay more than the applicable Limit of Insurance of Section I – Property.

Since both losses cover the loss of business income, the second claim will be reduced by the amount covered for that period of time that is covered by the first loss occurrence. Both claims will be subject to the 72-hour waiting period. The loss of income for the second period will cover the period of time not covered by the first claim.

Fish Tank Breaks

We have an insured with a HO6 policy with Travelers with a HA406 Special Condominium form who had a large fish tank that broke causing significant damage to her unit and to the unit below. Travelers denied the property and liability portion of the claim stating that there is no coverage for Fish Tanks. I can't find a Fish tank exclusion in the policy. This is concerning as we may have other customers with fish tanks and I want to alert them to the exclusion if there is one.
Was Travelers correct denying this claim?

New York Subscriber

Ok, there are a couple of things going on here. Let's start with the damage to the unit itself. There's coverage for Accidental Discharge or overflow of water from within a household appliance. Appliance is not a defined term - when terms aren't defined, courts turn to a standard desk reference since that's what insured's have access to. Merriam-Webster online defines appliance as:

b: an instrument or device designed for a particular use or function
specifically: a household or office device (such as a stove, fan, or refrigerator) operated by gas or electric current

The fish tank is designed for a particular use - that would make it an appliance. Nothing says that appliances are limited to stoves and refrigerators - a hair dryer is an appliance, as is a dehumidifier, a space heater, a curling iron, and a host of other products. The damage to the unit itself should be covered.

The adjuster is correct regarding liability if the policy provides coverage for occurrences for which an insured is legally liable. However, under additional coverages, there should be a section for Damage to Property of Others -it's often not a lot, but it provides coverage for stuff that just happens through no fault of the insured. Check the policy, there should be coverage there.

Driving on a Track

Please advise if the "racing" exclusion would apply to this scenario.I've attached the policy. In summary:
AUTO PHYSICAL DAMAGE COVERAGES
LIMITATIONS ON OUR DUTY TO PAY
What We Do Not Cover - Exclusions
We will not pay for loss:
9. to any owned auto while:
b. being used in an organized racing or demolition contest or in any stunting activity or preparation for any of these.

FACTS:
We have an insured who was allowed to take his own vehicle onto a race trackto drive. The specific program was: http://www.mvptracktime.com/
The insured had a customer invite him to this venue, and that customer was in the passenger seat. The venue did require participants to wear helmets. They drove the private passenger auto on the racetrack. There was no timing of their drive. They were not in competition with any other party. Nobody driving on the track was allowed to compete or even pass any other party without the vehicle in front waiving for them to do so. The insured was not experiencing this recreational situation with any intent of getting into racing.
Would this exclusion apply to this set of facts?

ANSWER

This is an interesting question. The term race is not defined in the policy; courts turn to a standard desk reference when terms are not defined.
Merriam-Webster defines racing as: the sport or profession of engaging in or holding races.
On the other hand, race is defined several ways, including to compete in a race or to go, move, or function at top speed or out of control. This last definition is important - in looking at the information for mvptracktime, while there may not be any winners and drivers are coached along the way, specific racing helmets are required, specific clothes are recommended in case of fire, drivers are to drive with the windows open in case of an accident, and the overall nature of the experience is akin to racing. While it is a racing/speed environment, there was no timing or attempt to beat other drivers. So while the vehicle was on a track, as there was no actual race, no timing of drivers, the insured was not engaged in racing or preparing for a race.

Morton v. Gov't Emples. Ins. Co., 2019 U.S. Dist. LEXIS 169202 (S.D. Fla.2019) is very similar to this situation - an insured drove his personal vehicle on a track at high speeds at an event designed to improve driving skills. The vehicle caught fire after it was parked and the insured filed a claim, which the insurer denied. The court found that since there are no races, no timing of drivers and lap speeds being recorded, that the exclusion for racing, speed or demolition contest or stunting activity did not apply. There should be coverage.

Public or Livery Passenger Conveyance and On-Demand Delivery Services Exclusion Application

Question:

Can you explain the paragraph in CA 23 45 11 20 Public or Livery Passenger Conveyance and On-Demand Delivery Services Exclusion,
"However, this exclusion does not apply to business activities performed by an "insured" that are directly related to the Named Insured(s) listed in the Declarations.

It would appear that this paragraph gives back coverage if an "insured" is using a listed vehicle for the purposes of a TNP or DNP.

Your thoughts are appreciated.

Answer:

Actually, that interpretation is not accurate. The provision gives back coverage to the insured's business operations that are normal and customary to its operations that are not TNP or DNP related. For example, an insured is a bakery and they have to deliver a cake. After the cake is delivered, they sign on to the TNP and give a few rides before heading back to the bakery facility. In this case, the endorsement would exclude accidents occurring while they were operating as a TNP but would cover accidents while delivering the cake.

You may find our analysis of the endorsement helpful.
Public or Livery Passenger Conveyance and On-Demand Delivery Services Exclusion

Vacation While Displaced

Memorial Day weekend fell into that time frame. The family decided to visit family the weekend and an additional day. They stayed in a hotel in Florida, obviously paid their own airfare, but the insurance carrier is considering it a vacation and is refusing to pay for lodging and meals. Is this legal to do by the carrier?

Pennsylvania Subscriber

ALE is for an insured's increase over normal expenses. While an insured is allowed to travel while displaced, all that's owed is reasonable costs because of the displacement, which would be the temporary housing costs of $200 a night and the $200 a week food budget. Anything over that would not be covered because it's not extra expense due to the loss, it's extra expense due to going to Florida on vacation. Unless there's policy language to the contrary, that's 5how it should be handled. We are unaware of any laws that would dictate how ALE is determined.

Auto Dealership - Business Interruption Coverage

Question:

How do we provide time element coverage for a dealership when their inventory is damaged by a covered loss (hail).

Answer:

Business income coverage is not included within the auto dealers coverage form and must be purchased separately. ISO has an available endorsement CA 99 05 Business Interruption Coverage which may be attached to the auto dealers coverage form to provide such coverage.

Under that endorsement, there must be a suspension of the dealership's operations during the period of restoration, with such suspension being caused by direct and accidental loss or damage to "scheduled property" as described in the endorsement's schedule.

Otherwise, the dealership's property policy may provide the business income coverage. Whether provided by the referenced endorsement, or by the property policy, there must be an actual suspension of the insured's operations during the period of restoration, with such suspension being a direct result of the covered damage, in your case, hail. Both of these methods require a 72 hour waiting period from the time of the direct physical loss before coverage will take effect.

If you have a specific claim situation that requires additional information, we will be happy to take a look once we receive all of the details.

Airbnb Expenses and ALE

According to the attached policy language regarding additional living expenses, and assuming the insured is within the policy's time period to recover benefits, would it be reasonable for an insurer to reimburse an insured under this coverage for expenses such as ongoing groceries, daily coffee, and daily meals when an insured is still displaced from their home but in a fully stocked Airbnb?

Same question regarding whether it would be reasonable for an insured to provide reimbursement for a 5 week Airbnb out of state vacation and commensurate dog boarding facility fees during this vacation period?

Colorado Subscriber

It really depends on the details of the Airbnb - if the kitchen is stocked with food similar to what the insured uses at home, the insured should use that. If there's an extra charge for use of the food, that would be covered.

If an insured went to Starbucks for coffee before the loss, then there's no coverage under ALE for that expense; it's an insured's normal expense. Likewise, if the insured normally cooks at home and is able to cook at the Airbnb, restaurant meals would not be covered.

ALE is only for costs above normal - insureds need to eat; if they normally eat out then the cost of eating out would not be covered since that's not an increase in their expenses. If they normally cook at home and have access to a fully stocked kitchen while displaced, then again, restaurant meals wouldn't be covered, since they can continue to eat normally. Only costs above normal are what ALE provides -additional living expenses. For example, if an insured who normally eats at home spends $100 a week on groceries and is now displaced to a hotel and is now spending $200 on meals out, the insured is entitled to $100 for that additional cost above the insured's usual grocery bill. Or if the insured doesn't like the food in the Airbnb and buys his own groceries instead like normal, that is not an increase in expenses.

While the insured is entitled to go on vacation while displaced, only the costs above their normal living expenses are covered because of the displacement. Boarding the pets because the insured decides to go out of town would not be covered. The insured's boarding the pets on vacation is a normal expense, so no ALE is available for that. Likewise, if the out of state Airbnb is more expensive than the local Airbnb, only the costs of the local Airbnb would be covered. The insured does not get to charge an out of state vacation to the insurer.

Accidental damage to DJ equipment from liquids

Question:

Our insured was working at a venue as a DJ and someone accidentally spilled their drink on him and his equipment. The items claimed to have been damaged are a laptop and a soundboard mixer. The insured had these items scheduled on the policy and the coverage form is the TIRB-900A Ed 1067 (attached). Our position is this is breakage of the items and that under the coverage form breakage must come from one of the listed perils.

We have a second claim very similar in that the DJ was working an event and someone accidently sprayed his laptop with water and damaged it. The computer is scheduled and the coverage form is the TIRB900A Ed 1067. This claim was also denied for the same reason, no covered peril under breakage.

Can you review the form and give an opinion on these?

Answer:

The policy is intended to cover unintentional, accidental damage from outside sources. As you stated, the policy does exclude breakage, except for certain specified perils. When a term is undefined in a policy, we look to its common meaning found in a standard dictionary. As such, the term "breakage” exclusion: To apply, there must be “breakage.” That term is not defined in the form, and Merriam Webster defines "break" in part as to separate into parts with suddenness or violence; or to fracture, such as with a bone. Thus, by its ordinary meaning it implies fracture/shattering/physical break of an article. Liquid ingress, shorting, and corrosion are not “breakage.” Because the insured has no part in drafting the policy language, it has been determined that exclusions are to be read narrowly and a narrow definition of breakage doesn't fit what happened to the insured. Unless there is physical evidence of damage such as a cracked screen, snapped boards, fractured housings, etc., the breakage exclusion does not fit and these claims should be covered.

Windstorm or Hail Deductible

Question:

Our client owns a hotel. The hotel was damaged by fire after a utility pole (owned by the power company) broke in half during a storm and the power lines landed on the insured’s downspout, energizing the downspout and starting the fire. There was substantial fire damage. There was no wind damage to the hotel or any hotel property. The carrier has taken the position that this is a wind loss and is applying a 2% wind deductible. It is our position that this is a fire loss and the standard deductible should apply. The policy is a BP 0003 and the Wind deductible form is BP 03 12. Please provide your opinion.

Answer:

From this description, the original cause of loss to the pole is wind that broke the pole in half. The wind damage is the proximate cause of loss to the pole, which ignited the fire. The BP 03 12 endorsement contains the following provision:

The Windstorm or Hail Deductible, as shown in the Schedule, applies to loss or damage to Covered Property caused directly or indirectly by Windstorm or Hail, regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage. If loss or damage from a covered weather condition other than Windstorm or Hail occurs, and that loss or damage would not have occurred but for Windstorm or Hail, such loss or damage shall be considered to be caused by Windstorm or Hail and therefore part of a Windstorm or Hail occurrence.

Since there is no exception for fire or explosion in this endorsement, and the above provisioncontains anti-concurrent loss provision, this deductible would apply to Covered Property at the premises identified on the endorsement schedule.

However, a utility pole owned by the power company, and not owned by the insured, would not be covered property at the premises shown in the schedule. As such, since there was no windstorm or hail at the insured's premises to their covered property, then the endorsement would not apply to the insured's covered property. The insured's covered property was directly damaged by fire, not wind, and as such the wind deductible does not apply to this loss. If the utility pole was owned by the insured, our answer would be entirely different as that would make it covered property damaged by wind.

Builders Risk Extra Expense Coverage for Advertising Expenses

Question:

The insured purchased a policy with a Builder’s Risk component for the construction of a multifamily property. At that time, they were offered both “Soft Cost” and “Extra Expense” coverage. They declined the “Soft Cost” coverage but purchases the “Extra Expense” coverage.
 
Following a windstorm that caused damage to the property there were substantial repairs and a delay in completion. As a result, they incurred extra expenses including advertising and extending the Builder’s Risk policy. The carrier does not dispute the validity of the expenses but has denied coverage based on the fact that the “soft cost” coverage specifically enumerates advertising and insurance. As these expenses are commonly paid under extra expense coverage, it is our position that the costs should be reimbursed under the extra expense coverage that was purchased. There is nothing in the policy excluding these items or stating that costs that may also be “soft costs” are excluded from the extra expense coverage. Policies often cover the same item under multiple coverages and pay out under the coverage that best helps the insured. For example, machinery and equipment may be covered under both building and business personal property. If one item of coverage is exhausted the insured can claim the item under the other. There should be no difference here. Extra expense is a stand-alone coverage and the expenses incurred should be reviewed based solely on if they fit in the extra expense coverage. Please provide your opinion.

Answer:

Extra expense coverage typically extends coverage for extra expenses that arise from covered property damaged by a covered cause of loss. While machinery and equipment would be covered property, under a builders risk policy if advertising expenses, which does fit soft costs, is not covered then it is not covered property subject to the covered cause of loss.

Damage to Non-Owned Tractor Trailer on Farm Premises

The claimant dropped his tractor-trailer off at the insured location to be loaded with grain. He left the tractor-trailer parked and unoccupied there overnight but took the keys with him. He was going to return the next day when the truck was loaded to take the grain to the mill. While it was parked on the insured premises and the claimant was not present on the premises or with the vehicle, the insured hit it with the combine and caused damage to the tractor portion.

I believe that the insured accepted a bailment of the claimant's tractor-trailer when the claimant parked it on the insured premise and left it overnight. When the claimant left the tractor-trailer parked there overnight, he left it in the insured's care custody and control and this is excluded on GL2.

Exclusionary language on GL2

EXCLUSIONS

"We" do not pay for a loss if one or more of the following excluded events apply to the loss, regardless of other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same time as, or after the excluded event.

2. Additional Exclusions That Apply Only to Coverage L -- Coverage L does not apply to:

d. damage to property that is rented to, occupied by, used by, or in the care of an "insured", except for "property damage" caused by fire, smoke, or explosion.

Answer:

We do not see any coverage under the policy for this loss of a motorized vehicle that is not used to service the premises. The exclusion you pointed out would deny coverage for property of others that is in the care, custody or control of the insured. However, the vehicle owner took the keys with them so the insured could not have moved the vehicle to prevent it from loss. The insured did not have care,custody or control simply because the vehicle was parked on the premises since they had no key with which to control the vehicle. The premises liability coverage does not extend to motorized vehicles not being used to service the premises. This business was not a parking lot and not subject to covering non-owned vehicles irresponsibly left on their premises. The coverage for damage to property of others does not cover motorized vehicles not being used to service the premises.

This being said, the insured could have liability for the damage under the policy that covers the combine. If you would like us to review that coverage, we will be happy to do so.