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October 15, 2015  

 
 Q&A of the Week
Property Temporarily Off-Premises

A Connecticut subscriber recently asked the following question:

My question concerns the definition of "temporarily" as used in the business personal property off-premises at a temporary location coverage. We have an insured who is allowing a nonprofit use of a copy machine for a short, yet undetermined, period of time. While the copy machine is off our insured's premises, I assume there is coverage, but for how long?

ANSWER: Looking at the ISO CP 00 10, the policy does not define the term "temporarily" in the coverage extension for property temporarily off-premises at a location the insured does not own, lease, or operate. The ISO rules do not specify an amount of time. We did not turn up any case law addressing this term in property policies. Merriam-Webster Online defines "temporarily" as "during a limited time," which does not offer much more guidance on how long temporarily is, but it does indicate that it is a fixed time that does end at some point. So, if the insured was indefinitely letting the nonprofit use the copier, that is not the intent of the extension, but there is nothing in the policy to limit the amount of time it can be temporarily used—it just cannot be a permanent situation.
 
 Litigation Watch
Minimum Auto Liability Limits

The injured passenger brought an action against the insurer of a vehicle seeking a declaration that the judgment against the driver, who was the son of the insured, was covered under the insured's auto policy. This case is Lyons v. Direct General Insurance Company of Mississippi, 138 So.3d 887 (2014).

Lyons suffered severe injuries in a single-car auto accident. The accident occurred when the car driven by Holliday, in which Lyons was a passenger, left the road and hit a tree. As a result of a lawsuit, Lyons won a default judgment of $72,500 from Holliday.

Holliday's mother, Lang had insured the vehicle with Direct General Insurance Company. However, the policy included a provision specifically excluding Holliday from any coverage, so the insurer denied any coverage for the default judgment. Lyons then filed this action seeking a declaration that the policy did cover the judgment. Lyons argued that the policy covered the judgment against Holliday because Mississippi law requires minimum liability coverage for all permissive drivers. The insurer countered that the law lacks any requirement for coverage of all permissive drivers and that the policy exclusion as to Holliday is valid.

The circuit court granted summary judgment to the insurer. The court of appeals reversed and remanded. The insurer then appealed to the Supreme Court of Mississippi.

The Supreme Court noted that prior to 2001, Mississippi contained no general requirement that the owner or operator of a vehicle carry liability insurance. Since then, however, the legislature did pass a law requirement that all vehicles operated within the state have liability insurance. The court found that the statute requires that an insurance card be maintained in the motor vehicle and that the insurance card serve as proof of liability insurance that is in compliance with the limits required by statute. The court said that the statute leaves no doubt that an insurer may not issue the card for use as proof of coverage unless the policy complies with minimum statutory requirements. Thus, if the policy provides no liability coverage for certain drivers, it does not comply.

Accordingly, the court held that the Direct General policy did not comply with the minimum liability coverage requirements of the statute. Moreover, this mandatory liability insurance requirement pertains to vehicles, not owners or operators. Said differently, every vehicle operated within Mississippi must have the statutorily required minimum coverage requirements of $25,000 for injury to one person, $50,000 for injury to two or more people, and $25,000 for property damage. The court ruled that a liability policy that purports to exclude that coverage for certain drivers fails to comply with the statutory mandate.

The court ruled that even though Holliday was an excluded driver under the policy issued by Direct General, the exclusion did not operate to eliminate liability coverage in the minimum amounts required by law. The ruling of the appeals court was affirmed.

Editor's Note: The Supreme Court of Mississippi holds that the statutory minimum requirements for mandatory auto liability insurance applies to vehicles rather than the owner or operator. So, even though the auto policy in question excluded coverage for the driver, coverage did exist for the injured passenger because such coverage applied to the vehicle involved in the accident.
 
 Fraud of the Week
Fraudulent Appraisals—Pennsylvania
AMOUNT: Unknown


A Pennsylvania woman already awaiting trial for insurance fraud has been charged with trying to get an appraiser to pass off altered documents as legitimate. The woman and another family member tried to convince the appraiser to say he had prepared and signed thirty-four typewritten appraisals for jewelry back in 1983. The appraisals were submitted in a claim in 1984 claiming that the jewelry was stolen. The family altered the appraisals by whiting-out the values and typing new values over them, then photocopying so the white-out would not be apparent. These altered appraisals were submitted to the carrier to support the claim. The family pressured the appraiser, made personal visits, sent flowers and a fruit basket, and even visited his home in attempts to get him to lie about the appraisals. One family member was charged with witness intimidation, criminal conspiracy, and obstruction of the administration of law, and released on $500,000 bail.
 
   
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