| Q&A of the Week |
Personal Property in Detached Trailer Considered Temporarily Stored?
A Puerto Rico subscriber recently asked the following question:
Our insured has a warehouse operation. A common carrier arrived late at the warehouse and detached the trailer within 100 feet of the insured building. That trailer's goods were not unloaded to the warehouse that day because the trailer arrived minutes before closing hours. During that night the trailer was stolen. The personal property inside the trailer was valued at $200,000.
The insured has form CP 00 10 10 12, Building and Personal Property Coverage Form. Does the $10,000 limitation under the coverage extension for business personal property temporarily in portable storage units apply to this situations? The clause includes detached trailer. Do you consider this an unloaded trailer with goods being temporally stored? The form reads as follows:
5. Coverage Extensions
Except as otherwise provided, the following Extensions apply to property located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the described premises.
g. Business Personal Property Temporarily In Portable Storage Units
(1) You may extend the insurance that applies to Your Business Personal Property to apply to such property while temporarily stored in a portable storage unit (including a detached trailer) located within 100 feet of the building or structure described in the Declarations or within 100 feet of the premises described in the Declarations, whichever distance is greater.
(4) Under this Extension, the most we will pay for the total of all loss or damage to business personal property is $10,000 (unless a higher limit is indicated in the Declarations for such Extension) regardless of the number of storage units.
ANSWER: The situation you describe would fit the parameters of the coverage extension. Since the extension explicitly states that a detached trailer is included as a portable storage unit, the goods were meant to be unloaded at the warehouse—so were temporarily stored—and the trailer was located within 100 feet of the building, the extension should apply. |
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| Litigation Watch |
Lead Paint as a Pollutant
The insurer brought an action against the insured for a declaratory judgment that lead paint ingested by a child was a pollutant. This case is Georgia Farm Bureau Mutual Insurance Company v. Smith, 2016 WL 1085397.
The Supreme Court of Georgia granted a petition for certiorari to the Court of Appeals to determine whether the Court of Appeals erred in holding that personal injury claims arising from lead poisoning due to lead-based paint ingestion were not excluded from coverage pursuant to an absolute pollution exclusion in a commercial general liability policy.
In the particular case, Smith sued her landlord (Chupp) for injuries sustained by Smith's child as a result of ingesting lead from deteriorating lead-based paint at the house Smith rented from Chupp. Chupp, the insured, tendered the claim to his insurer, Georgia Farm Bureau. The insurer filed a declaratory judgment action seeking a determination that the injuries were not covered under the policy due to the pollution exclusion. The trial court ruled that lead-based paint unambiguously fell within the policy's definition of pollutant and so, the injury claim was excluded by the pollution exclusion. Upon appeal, the Court of Appeals reversed the lower court ruling and held that the terms in the pollution exclusion were ambiguous. The Supreme Court of Georgia then granted the petition for certiorari and posed this question: were the claims for person injury resulting from lead-based paint ingestion excluded from coverage pursuant to the pollution exclusion?
The Supreme Court of Georgia recognized this question as a matter of first impression for the state. The court did examine the history of the pollution exclusion in insurance policies but noted that Georgia courts have enforced absolute pollution exclusion clauses without requiring that the pollutant at issue be explicitly named in the policy. The court then decided that the plain language of the pollution exclusion in this instance was determinative. The court found that the contractual language of the pollution exclusion unambiguously governs the factual scenario in this case.
The court concluded that Smith alleged that her daughter suffered lead poisoning and permanent injury from the ingestion of lead-based paint found on the premises that she rented from Chupp. Under the broad definition contained in the policy, the court said that lead present in paint unambiguously qualifies as a pollutant and that the plain language of the policy's pollution exclusion excluded the claims from coverage. The decision of the Court of Appeals was reversed.
Editor's Note: The Supreme Court of Georgia holds that, as a matter of first impression, lead is a pollutant within the meaning of the absolute pollution exclusion.
This case is also noted for the brief but instructive history of the pollution exclusion that the court presented. |
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| Fraud of the Week |
Auto Fraud – Oklahoma
AMOUNT: $28,068
Arrest warrants have been issued for two men for insurance fraud. A 2014 Chevy pickup truck was reported stolen in December 2014. The claim was settled for $28,068. However, the wheels and tires were spotted on another vehicle, and the owner of that vehicle stated that he bought the equipment from the friend of the original owner. Apparently the owner of the vehicle gave the friend the keys to the truck and said it "needed to go away"; the truck belonged to a roommate who could no longer make payments on the vehicle. The pickup truck was buried in order for the owner to be able to claim it was stolen.
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