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July 23, 2015  

 
 Q&A of the Week

Meaning of "Entrusted" in Contractors Equipment Coverage

A Puerto Rico subscriber recently asked the following question:

Our insured has a company that leases and rents contractors equipment. A customer with a fake ID rented equipment from them and never returned it.

The Contractor's Equipment form included under the policy insures against direct loss or damage; however, there is an exclusion that states the following:

8. Infidelity of insured's employees or persons to whom the insured property is entrusted.

Is the word "entrusted" broad enough to include property rented to others? The insured feels that this exclusion applies only to infidelity of employees or incidental events like lending the equipment to a friend, not to formal events like renting the equipment to a customer.

ANSWER: Since the policy does not define the term, it is fitting to look to standard dictionary definition. Merriam-Webster Online defines "entrust" as "to give someone the responsibility of doing something or of caring for someone or something." Applying this meaning, allowing a customer to take rented equipment from the premises is entrusting the customer with the equipment. From the policy language provided, the entrustment does not appear to be limited to employees and informal lending to a friend. So, unless the policy says otherwise in another provision or exclusion, the word is broad enough to encompass the scenario you describe.
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 What's New This Week in FC&S

Explosion, Collapse, and Underground Exclusions

Under the comprehensive general liability policy, property damage included within the explosion hazard, the collapse hazard, or the underground property damage hazard was specifically excluded. Read More

 
 Litigation Watch
Coverage for a Business under HO Policy

This matter involves a dispute over insurance coverage between the insured and the insurer. The case is Clarence Perry v. Hartford Underwriters Insurance Company, 2015 WL 3508099.

Perry owned and operated a business, Perry Trucking, from his residence. Perry did not have a commercial insurance policy with Hartford or any other insurance company to insure the business activities of Perry Trucking. Perry employed White as a truck driver; White had permission to use the truck for business purposes only.

On March 17, 2007, Perry noticed that the truck was missing. Perry had not assigned a job for White and when he confronted White about the missing truck, White admitted he used the truck to complete a job unaffiliated with Perry Trucking. Perry fired White and this led to a verbal and physical altercation. Perry was charged with criminal assault and, anticipating a civil lawsuit, submitted a claim with Hartford under his homeowners policy.

Hartford denied coverage based on an exclusion for business activity. Specifically, Hartford claimed that the personal injury suffered by White arose out of a dispute related to Perry Trucking and so, was not covered by the homeowners policy. This lawsuit arose from the coverage dispute.
Read More
   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

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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As always, your comments and questions are welcome.

Contact us at:
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The Zalma Insurance Claims Library
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Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
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FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
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Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
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David D. Thamann, J.D., CPCU, ARM
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  Emily Brunner
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  Donna Cozatchy
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Barry Zalma, Esq., CFE
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