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March 26, 2015  

 Q&A of the Week

GKLL Faulty Work Coverage

A Florida subscriber recently asked the following question:

Our insured carries a garagekeepers policy with the following coverages: collision (legal liability) and comprehensive (legal liability). While installing a window tint, the insured by accidentally cracked the windshield.

The adjuster believes the following exclusion applies: B. Exclusions: 1. This insurance does not apply to any of the following: d. Faulty Work. Faulty work you performed. The insured believes the exclusion does not apply to this loss. The insured believes that this loss is covered because his policy carries comprehensive coverage and because the exclusion only applies to work that has already been performed.

What is your opinion?

ANSWER: We agree with the insured. The exclusion is clearly worded in the past tense, that is, "work you PERFORMED." If the exclusion were to apply to present operations by the insured, the exclusion would have been worded differently. Besides, coverage for damage done to the customer's auto while being worked on by the insured is the purpose of garagekeepers coverage, as the insuring agreement makes clear.
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 What's New This Week in FC&S
Fine Arts Form
The Fine Arts Form, PM 00 17 12 02, is a little different than most inland marine forms in that it covers a multitude of objects. Fine arts could be paintings, china, textiles, metalwork, books, or other types of artistic items. As such they are best insured under an inland marine form; they are susceptible to more than just the average named perils, and their value may be significant. ISO form PM 00 17 is designed to provide coverage for such items. Read More
 Litigation Watch
Electronic Fund Transfer Coverage Dispute

The insured appealed a judgment in favor of the insurer pertaining to a coverage dispute over the theft of over $188,000 from an escrow account. This case is Metro Brokers, Inc. v. Transportation Ins. Co., No. 14-12969, 2015 WL 925301 (11th Cir. March 5, 2015).

Metro is a real estate brokerage firm conducting business in Georgia. Metro maintained bank accounts with Fidelity Bank and used the bank's online system to make payments from Metro's accounts. In 2011, thieves logged into the bank's online banking system using a Metro employee's access ID and password. Then, using a randomly generated single-transaction security code, the thieves authorized various payments from a Metro client escrow account to several other bank accounts.

Metro filed a claim under its insurance policy with Transportation Insurance Company (TIC). The insurer denied coverage based on the policy's malicious-code and system-penetration exclusions. Metro countered that the coverage existed under the fraud and alteration endorsement. Metro sued for coverage, but the trial court found in favor of the insurer. This appeal followed.
 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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 Contact Us
As always, your comments and questions are welcome.

Contact us at:
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The Zalma Insurance Claims Library
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.
  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
Managing Editor, FC&S Bulletins
  Emily Brunner
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Managing Editor, Electronic Publications
  Tosha Brinkman
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Donald S. Malecki, CPCU
Contributing Editor
  Donna Cozatchy
Creative Director
Barry Zalma, Esq., CFE
Contributing Editor
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