Q&A of the Week |
Personal Property of Others in Comparison with Bailees Coverage
A Connecticut subscriber recently asked the following question:
What is the difference in coverage between personal property of others and a bailees form? If I insure a small art framing shop that has $10,000 of customers goods, I would use a bailee form but I'm not sure why.
ANSWER: Property of others can be insured on the Building and Personal Property Coverage Form under section A.1.c at a similar rate as the insured's personal property. Up to $2,500 is available via the coverage extension for personal effects and property of others. Also, a separate commercial inland marine form for bailees' customers is available. The main difference is that bailees coverage generally provides property-in-transit and off-premises coverage that is not available on the Building and Personal Property Coverage Form. |
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Litigation Watch |
Liability Exclusions and Coverage for a Limited Liability Company Owner
The insurer sought a declaratory judgment as to whether it had a duty to pay a claim on a limited liability company's (LLC) commercial general liability policy based on the owner's damage to personal property caused while he was conducting work for the LLC. This case is Dakota Fire Insurance Company v. J&J McNeil, 849 N.W.2d 648 (2014).
McNeil owned and operated the LLC, an excavation and snow-removal company. The LLC owned a number of vehicles, including a Caterpillar scraper. McNeil personally owned a number of vehicles, including a 2008 Shelby GT. The Shelby had no business purposen.
In the early hours of November 2008, McNeil needed to service the scraper and mobilize it for a commercial development project. He backed the Caterpillar out of a shed and accidentally drove it over his Shelby, destroying it. McNeil made an insurance claim against the LLC's commercial general liability insurer, Dakota Fire, for the damage caused to the Shelby. The insurer filed a declaratory judgment action seeking a determination of whether its insurance policy creates a duty to pay the claim. The circuit court ruled in favor of McNeil and this appeal followed.
The Supreme Court of South Dakota said that coverage was triggered but that the court had to decide if any policy exclusions applied. The insurer argued that the "property you own, rent, or occupy" exclusion applies to the property damage since McNeil caused the damage and he owns the Shelby. The insured said that the exclusion applies only to property the LLC owns, rents, or occupies. The Supreme Court found that the exclusion plainly states that the term "you" only refers to the named insured, and the named insured in the Dakota policy was J&J McNeil, not McNeil himself. Therefore, the exclusion only refers to the LLC's property. The LLC did not own the Shelby and so, the exclusion was not applicable in this instance. |
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