Q&A of the Week |
Theft or Vandalism Damage?
A Virginia subscriber recently asked the following question:
Applicable policy is a CP 00 10 10 91, Special Cause of Loss form. It is endorsed with a Theft Exclusion, CP 10 33 11 85. The insured's building was broken into and the floor safe was sledgehammered. The point of sale cash register was also pried open and the telephone lines were cut and the surveillance cameras damaged. We have issued partial denial for cash stolen and anything related to the business personal property damaged as result of the theft, but the insured feels damage to the point of sale system cash register and cameras that were damaged in the course of the theft should be covered, as the insured considers that damage vandalism.
ANSWER: The Theft Exclusion endorsement states, "We will not pay for loss or damage caused by or resulting from theft." An exception is made for building damage caused by the breaking in or exiting of the burglars.
The prying open of the cash register would be considered damage resulting from theft. This is not vandalism–maliciously destroying the cash register–but the burglars trying to get the cash out of it.
The camera damage is a little more on the fence. The cameras were most likely damaged to prevent them from taping the burglary, which is still not vandalism. Vandalism is generally characterized as damage done for no purpose but to destroy property, whereas the damage you describe is incidental to the burglary. |
|
Litigation Watch |
Blanket Additional Insured Endorsement
The general contractor brought an action against the subcontractor and the subcontractor's liability insurer seeking a declaration that it was an additional insured under the subcontractor's policy, and that the insurer was obligated to defend it in an underlying personal injury lawsuit by the sub-subcontractor's employee. This case is Mecca Contracting v. Scottsdale Insurance Company, 140 A.D.3d 714 (2016).
Mecca was the general contractor on a construction project and hired Salcora Construction to perform certain work on the project. Mecca entered into a contract with Salcora wherein Salcora agreed to purchase liability insurance and list Mecca as an additional insured. Salcora purchased a general liability policy from Scottsdale.
While Mecca was not explicitly named as an additional insured on this policy, the policy did have a blanket additional insured endorsement attached. This endorsement provided that any person or organization whom Salcora was required to add as an additional insured on the policy pursuant to a written contract would be considered an additional insured under the policy. The policy provided Salcora with primary coverage and the blanket additional insured endorsement provided any additional insured with excess coverage unless a written contract specifically required that the Scottsdale policy be primary. It is undisputed that the contract between Mecca and Salcora expressly states that the Scottsdale policy would be primary.
A worker for a sub-subcontractor hired by Salcora on the project site was injured when his hand became trapped under a fire escape ladder. He sued Mecca and others and Mecca sought coverage under the Scottsdale policy. The insurer disclaimed coverage and Mecca brought this action, seeking a declaration that the insurer was obligated to provide a defense. The Supreme Court, Kings County, granted summary judgment to Mecca and the insurer appealed.
The Supreme Court, Appellate Division, Second Department, New York, noted that Mecca established its prima facie entitlement to the declaration sought by simply submitting its contract with Salcora. In that contract, Salcora agreed to make Mecca an additional insured. The policy provided primary coverage to Salcora and under the blanket additional insured endorsement, Scottsdale agreed to provide primary coverage to any party with whom Salcora entered into a contract if such contract specifically required the Scottsdale policy to be primary. Since the policy provided Salcora with primary coverage and Salcora agreed to make Mecca an additional insured, the contract between Mecca and Salcora constituted a contract requiring Scottsdale to provide Mecca with primary coverage, and satisfied the requirement of the blanket additional insured endorsement.
In opposition, Scottsdale failed to raise a triable issue of fact. Accordingly, the opinion of the trial court was affirmed. Mecca was an additional insured entitled to primary coverage under the Scottsdale policy.
Editor's Note: Even though the blanket additional insured endorsement stated generally that coverage for an additional insured would be excess, it also stated that if a written contract specifically required that the policy provide primary coverage for the additional insured, the policy would be primary. Mecca and the insured (Salcora) entered into a contract wherein the parties agreed that the policy would provide primary coverage to Mecca. Why the insurer disputed this issue is a mysterious question since the contractual language clearly established its obligation to defend Mecca under a primary basis. |
|
Fraud of the Week |
Workers Compensation Fraud – Washington
AMOUNT: $100,000
A former corrections officer in Tumwater, Washington, is accused of holding three security jobs while claiming that an on-the-job injury was so severe that he could not work. He was caught running on a treadmill and sidewalk and driving himself to work all while collecting over $100,000 in workers compensation benefits. After an on-the-job ankle injury, the officer made regular declarations on official forms that because of the injury he could not work and was not working. After years of workers compensation payments, the claims manager requested surveillance, which revealed the officer driving to a job. He had been employed more than full-time throughout the time the workers compensation payments were being given to him. It is thought that the officer in question has fled to Michigan.
|
|
|
|
|
Subscribe to FC&S |
FC&S Online is the unquestioned authority on insurance coverage interpretation and anlaysis for the P&C industry. FC&S offers unbiased analysis and interpretation and keeps you current on the latest ISO and AAIS revisions. Providing instant access to the very latest information, FC&S is the resource that agents, attorneys, brokers, risk managers, underwriters, and adjusters rely on to research commercial and personal lines coverage issues. |
• |
Quickly and accurately determine coverage under a policy at the time of loss |
• |
Research coverage issues and interpretations, including court cases |
• |
Access experts live to discuss specific situations |
• |
Find answers to questions based on real-world claims disputes |
• |
View and print ISO forms |
• |
Access updates on breaking litigation and bureau developments |
|
|
|
Join Us Live! |
FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@alm.com, for more information. They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer. |
|
Contact Us |
As always, your comments and questions are welcome.
Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2246
Email: eAlerts@nuco.com |
|
|