When my client moves, what coverage does his ISO HO policy provide him? If there is a loss during the moving process, will the ISO HO policy respond?
Posted on September 18, 2009
The answer depends on the type/range of perils applicable to Coverage C. Personal Property and the particular loss. The unendorsed ISO (HO-91 or HO-2000) HO-3 Special Form policy provides “named peril” coverage to contents. These 16 named perils are essentially the same as found in the HO-4 Tenants Policy, HO-2 Broad Form Policy or HO-6 Unit-owners Policy.
One of the named perils is “vehicles”. If the moving van is involved in an accident there could be resulting damage to the contents inside. The vehicle peril in the ISO HO policy should respond to this situation. Certainly, if the moving van overturns, the “vehicle” peril would respond to the resulting damage to the contents inside the moving van. If items fell off the vehicle used to transport the items to the new location, again, the “vehicles” peril should respond. If the moving van hit the curbing, sideswiped another object or the top of the van struck an overhang any resulting damage to the contents in the interior of the moving van would be covered under the “vehicles” peril.
The ISO HO policy does not require that there be physical contact by the vehicle, it merely requires that direct physical loss to covered property be caused by a listed peril.
B. Coverage C – Personal Property
We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I – Exclusions.6. Vehicles
Just what is “caused”?
A listed peril must be the “cause” of direct physical loss to covered property. Dictionary definitions of “cause” include:
a. The producer of an effect, result, or consequence. b. The one, such as a person, event, or condition, that is responsible for an action or result. or to be the cause of; bring about.
You know … that whole “proximate cause/efficient proximate cause” or “chain of events” theory. If not for being in a vehicle … if not for the vehicle hitting something … would your property have suffered DIRECT PHYSICAL loss?
The Massachusetts Supreme Court discussed causation in the Jussim v. Massachusetts Bay Insurance Co ., 415 Mass 24, 610 NE2d 954 (1993):
The principle quoted above is based on a test which has long been used by this court to resolve coverage controversies in chain causation cases. That test seeks to determine the efficient proximate cause of the loss. If that cause is an insured risk, there will be coverage even though the final form of the property damage, produced by a series of related events, appears to take the loss outside of the terms of the policy…
The active efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source is the direct and proximate cause referred to in the cases …57
Citing Jussim, a U.S. District Court acknowledged that Massachusetts generally recognizes a “chain of events” rule that permits plaintiffs to recover for an excluded loss if the efficient proximate cause of that loss was covered but nonetheless denied coverage where the policy unambiguously excluded damage caused by a fire that occurs at the same time as, or ensues from, a boiler or machinery breakdown.59
It’s interesting …
How we like to add WORDS to the policy. Some think there is only coverage when the vehicle HITS the covered property … WHERE oh WHERE does it say THAT??? Please there are WAY too many words in the policy already … let’s not add anymore!
How much coverage do I have in the moving van?
The ISO HO policy allows the client complete Coverage C limit to apply while temporarily off the residence premises. Of course, all “special limits” or exclusions as to particular types of property apply.
What happens if the new $2,500 HD Plasma TV is dropped while moving into or out of the moving van?
Dropping is NOT a named peril. The unendorsed HO-3, the HO-4, HO-6 and HO-2 would not cover this scenario. However, if the ISO HO-91 HO-3 were endorsed with the HO-15 Special Personal Property Coverage endorsement, then this claim could be covered. This endorsement can only be added to the HO-3 Special Form policy. It provides “open peril” coverage to the property covered under Coverage C. Or, if your company uses the HO-2000 version then sell the HO-5 Comprehensive form.
If your insured has an HO-6 under either the HO-91 or HO-2000 program then the HO 17 31 Special Form Coverage C endorsement should be added. Under the HO-2000 program there is even an “open perils” endorsement for the Tenant HO-4 form. This endorsement number is HO 05 24
I thought there was “breakage” exclusion under the all risk policies or
endorsements …
Open perils contents DOES have a restriction for breakage of certain articles such as eyeglasses, glassware, statuary, marble, porcelains, bric-a-brac and similar fragile articles other than jewelry, watches, bronzes, cameras and photographic lenses. This “short list” of articles is covered for breakage ONLY if caused by certain named situations and “dropping” is NOT one of them!!!
Remember … HO loses are paid on an ACV basis …
Whether your client has “named peril” contents coverage or “open peril” contents coverage, losses are paid on an ACV (depreciated) basis. In order to remove this “depreciation” penalty, the Replacement Cost Endorsement HO 04 90 is necessary.
Wouldn’t the moving van business be responsible for the loss, anyway??
Well, yes… maybe. If the client signed any paper work they might have “waived” or “reduced” their rights of action against the moving business in order to get a cheaper rate.
The moving van company might be responsible, but do they have insurance??? The BAP policy
that covers their moving van has an exclusion entitled “Care, Custody or Control”.
The BAP liability portion will NOT cover “Property damage” to or “covered pollution cost or expense” involving property owned or transported by the “insured” or in the “insured’s care, custody or control.”
The CGL policy that the moving van business purchases to cover their “other than auto operations” also has a care, custody and control exclusion.
The CGL property damage liability coverage does NOT apply to “property damage” to personal property in the care, custody or control of the insured.
If the customer makes a claim, it will be directly against the moving business, not against the
BAP or CGL insurance of the moving business.
Could the moving company purchase coverage for this exposure?
Yes, there is inland marine coverage that the business can purchase. But, do they? Or, do they “pass the cost along” to the customer? Does the customer sign away their rights in order to get a cheaper price? Does the customer reduce their actual values received if there is a loss to a lower valuation in order to get a cheaper price?
If the client has the homeowners coverage for the loss caused by the moving company …
By purchasing “open peril” coverage on their contents, most items will be covered for breakage. The HO insurance carrier will make the decision as to whether they will subrogate or not. Also, the insured has the open peril coverage “all year round” now which can be a good thing for losses such as power surge to electronic equipment!
What if the insured moves their OWN property …
The HO policy still applies ….as long as the insured did not INTENTIONALLY damage his/her stuff!
Will the MAP apply to a loss if stuff falls out of the vehicle or gets damaged in the vehicle?
No … Part 4 under the MAP excludes:
6. To an auto or other property owned by you or the legally responsible person. Similarly, we will not pay for damage to an auto or other property, except for a private residence or garage, which you or the legally responsible person rents or has in his or her care.
The infamous “care, custody, and control” exclusion sends the claim back to a property policy … the homeowners policy.
Yes, the HO deductible STILL applies … so … is the loss worth submitting to the company … if one might lose their loss free credit … or worse yet … the policy renewal!
PS … the AAIS forms … are very similar …
From a “named peril” standpoint Contents starts out with:
“We” insure against direct physical loss to property covered under Coverage C caused by the following perils, unless the loss is excluded under the Exclusions That Apply To Property Coverages:
f. Vehicles
Direct Physical loss merely needs to be “caused by” a listed peril. And … the vehicle peril … also is only ONE word … don’t add any more! The “all risk” coverage is similar in the breakage language to the ISO policy … so moving is covered under the AAIS form … and dropping and breaking can be covered under the “all risk” forms but NOT for eyeglasses, glassware, statuary, marble, porcelains, bric-a-brac and similar fragile articles!
Filed Under Newsletter | Leave a Comment
Leave a Comment
If you would like to make a comment, please fill out the form below.