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June 2, 2016  

 
 Q&A of the Week
Customers' Flooring under the Building and Personal Property Coverage Form

A Connecticut subscriber recently asked the following question:

We insure a flooring company that will store flooring in their warehouse that belongs to a customer. What is the best option to insure the property of others: merely allow the property value to be included in the BPP limit as the definition of BPP includes property of others or specify a limit for personal property of others?


ANSWER: The ISO CP 00 10 Building and Personal Property Coverage form contains a coverage extension for personal property of others that is in the insured's care, custody, or control. The extension carries a limit of $2,500. If the insured needs more coverage, the property should be covered under the personal property of others coverage, which is designed to cover such property. The business personal property coverage part applies to the insured's property.
 
 Litigation Watch
One Accident versus Multiple Accidents

State Farm Mutual Automobile Insurance Company sought a judgment declaring that several collisions constituted one accident under its insured's policy. This case is State Farm Mutual Automobile Insurance Company v. Glover-Shaw, 2016 WL 687180.

Suljic was driving drunk southbound on Broadway. She crossed the center lane and hit Maxfield's car. She then swerved into the southbound left turn lane and rear-ended Kennedy's car. This slammed Kennedy's car into the rear end of Thayer's car. Suljic continued southbound, ran a red light, and hit Price's car which was then hit by Conner's car. All of these collisions occurred in about four to five seconds within about 160 feet.

After all these collisions, the issue of liability insurance arose. Suljic was driving a car owned by and insured to Glover-Shaw. The auto policy provided liability insurance coverage in the amount of $100,000 per accident. Glover-Shaw's insurer, State Farm, filed a complaint for declaratory judgment requesting a declaration that the numerous collisions constituted one accident for the purposes of liability coverage. The trial court denied State Farm's motion and this appeal followed.

The Court of Appeals of Washington, Division 1, noted that under Washington case law, all injuries or damage within the scope of a single proximate, uninterrupted, and continuing cause must be treated as arising from a single accident. So in this instance, the sole question facing the court was whether Suljic regained control of her car at any point during these collisions. If she did, one or more of the collisions may have a separate proximate cause and thus constitute a separate accident for insurance coverage purposes.

The court found that State Farm presented a prima facie case that the collisions shared one proximate cause—Suljic's initial negligence in driving while drunk and losing control of her car. On the other hand, the respondents in this appeal did not adequately respond to the insurer's contentions with specific facts to show that Suljic regained control of the car. Moreover, Suljic's blood alcohol level was above the legal limit and her driving was erratic and dangerous, including veering into oncoming traffic. These facts, said the court, supplied ample evidence that Suljic was not in control of her car.

The facts set forth in State Farm's motion for summary judgment established for the court that Suljic's negligence in losing control of her car was the sole, uninterrupted proximate cause of all of the collisions at issue. Therefore, the appeals court found that the trial court erred in denying State Farm's motion for summary judgment. The trial court's ruling was reversed.

Editor's Note: The Court of Appeals of Washington finds that even though multiple collisions occurred in this instance, there was only one accident for insurance coverage purposes. The court found that the responsible driver never regained a full measure of control over her car so the only proximate and continuing cause of the collisions was her initial negligence that caused her to lose control of the car.
 
 Fraud of the Week
Agent Fraud – Florida
AMOUNT: $1,000,000+


A Florida agent has been tried and convicted of stealing more than $1 million in premium payments from his clients. He is sentenced to seven years in prison and restitution of $1.3 million. A carrier made a complaint to the insurance department that the agent had stolen premiums from two clients and used the funds for personal gain. He was arrested for fraud on those charges, and two years later faced similar charges when an insured suspected that $95,000 intended for an annuity payment had been stolen and filed a complaint with the department. After his seven years is up, he faces three years of supervised probation, and is barred from working in the insurance industry.
 
   
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The Zalma Insurance Claims Library
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Insurance Claims: A Comprehensive Guide
The only source you'll need to successfully handle insurance claims from start to finish. More Info
Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
Mold Claims Coverage Guide
This guide will allow you to handle mold insurance claims and litigation resulting from mold or fungi related disputes with confidence. More Info
For more information about these titles Click Here
 
FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
Consulting Editor
David D. Thamann, J.D., CPCU, ARM
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  Tosha Brinkman
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Barry Zalma, Esq., CFE
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  Donna Cozatchy
Creative Director

 
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