| Q&A of the Week |
Employee as an Insured
A Georgia subscriber recently asked the following question:
Our insured owns an office building with six floors designated for parking areas to be used by employees and the general public at no charge. An employee of the insured, while doing maintenance work with a trimmer, broke a window glass of a parked vehicle that belongs to another employee of the insured.
We are of the opinion that due to paragraph 2.a.(2) of Section II – Who is an Insured, this event is excluded under the CGL coverage form. We believe that the insured needs a garagekeepers policy. We would like to have your opinion.
ANSWER: We do not agree. That paragraph simply states that the employee is not considered an insured under those circumstances, that is, when causing property damage to property owned by any employee of the named insured. However, it has no effect on the coverage for the named insured if the named insured is held responsible for the damage. Garagekeepers coverage would be needed if the named insured has the care, custody, or control of the vehicles, so you would need to check out that point. |
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| Litigation Watch |
Criminal Acts Exclusion Examined
The insured landlord brought a declaratory judgment action against the insurer to recover expenses paid to decontaminate a house where the tenant had manufactured methamphetamine. This case is Neighborhood Investments v. Kentucky Farm Bureau Mut. Ins. Co., 430 S.W.3d 248 (2014).
Neighborhood leased a house to McCormick. During the lease, McCormick was arrested for manufacturing methamphetamine (meth) in the house. It was later determined that the byproducts of the meth production had contaminated the house and made it uninhabitable. Neighborhood was prohibited by the authorities from re-leasing the house until the premises was decontaminated.
Neighborhood filed a declaratory action against its insurer, Kentucky Farm Bureau Mutual for a determination of whether the insurance policy covered the decontamination expenses. The insurer denied coverage and the circuit court granted summary judgment in favor of the insurer. Neighborhood appealed.
The Court of Appeals of Kentucky noted that the circuit court found that the dishonest or criminal acts exclusion disposed of the claim of coverage. The appeals court said that, from a plain reading of the exclusion, three requirements must be met in order to trigger the exclusion: a loss caused by a dishonest or criminal act committed by anyone that Neighborhood entrusted with the property for any purpose. In this instance, there was a loss caused by a criminal act, so the issue for the appeals court was whether that act was committed by someone that Neighborhood "entrusted" with the property. |
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