| Q&A of the Week |
Creditor of Production Equipment as Mortgagee
A Lousiana subscriber recently asked the following question:
Is there anything definitive that states that a secured creditor of large production equipment (not permanently installed) can or cannot be listed as a mortgagee on a commercial property policy?
I believe the loan can be characterized as a chattel mortgage. My view is that a mortgagee can be on either real or personal property, it just needs to be some type of secured loan.
ANSWER: We agree with your view. In the ISO Mortgageholders E&O Coverage Form, CP 00 70, "mortgageholder's interest" is defined as "your interest, as mortgageholder, in real or personal property, including your interest in any legal fiduciary capacity." This acknowledges that the property can be real or personal. There is nothing in the ISO Commercial Lines Manual rules stating that a mortgage must be only on real property, so it is our opinion that it can be on real or personal property. Read More |
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| What's New This Week in FC&S |
Signs Coverage Form
The Signs Coverage Form, CM 00 28 01 13, is included in the Insurance Services Office's (ISO) inland marine program. According to ISO's manual, it affords open perils coverage only for neon, fluorescent, automatic, or mechanical electric signs and lamps. Billboards or ordinary fixed signs, whether or not they are directly illuminated by electric lights are ineligible for coverage. Read More |
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| Litigation Watch |
CGL Coverage versus Auto Coverage
This insurance dispute arose out of an accident in which a forklift and a truck were involved. The case is National American Ins. Co. v. Harleysville Lake State Ins. Co., No. 1:13-cv-1297-WTL-MJD, 2014 WL 6388783 (S.D. Ind. Nov. 14, 2014).
Venture Logistics offers trucking, freight, warehouse, and brokerage services to its clients. Powder Coatings was a customer of Venture Logistics. Parker was a truck driver for Venture and went to Powder to complete a job. Harden worked for Powder as a forklift operator and started to unload skids from the Venture truck driven by Parker. After Harden had unloaded some skids, Parker asked him if he was finished; he said no. Nevertheless, Parker began to drive away. Worried that the forklift would fall off the truck as it went up a hill, Harden got off the forklift and tried to get Parker's attention. The forklift subsequently slid down the truck and pinned Harden against the wall. As a result of the accident, Harden was seriously injured and sued Venture Logistics and Parker.
Venture was insured by State National Insurance Company under a commercial truckers coverage policy and by Harleysville Lake State Insurance Company under a commercial general liability policy. State National undertook the defense of the claim against Venture Logistics but after an investigation, noted that an exclusion might apply. This exclusion pertained to movement of property by a mechanical device, such as a forklift. State National notified Harleysville that it may have potential coverage liability for the accident. Harleysville investigated the accident and then denied coverage based on the auto exclusion in its policy.
The Harden lawsuit was settled by State National which then sued Harleysville seeking subrogation or a contribution from Harleysville. Read More
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| FC&S Ask the Experts |
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Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here. |
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