| Q&A of the Week |
Are Drones Always Aircraft?
A Virginia subscriber recently asked the following question:
How is the industry currently handling drone coverage—are they always considered aircraft?
ANSWER: In short, yes, drones are always aircraft. The International Civil Aviation Organization defines "aircraft" as "any machine that can derive support in the atmosphere from the reactions of the air other than the reactions of the air against the earth's surface." Read More |
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| What's New This Week in FC&S |
Farm Property – Farm Personal Property Coverage Form FP 00 13, Coverages E and F
This article discusses coverage E for scheduled farm personal property, and coverage F for unscheduled farm personal property, coverage for newly purchased livestock and machinery, and property not covered. Read More |
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| Litigation Watch |
The Standard or Union Mortgage Clause
First-party property insurance policies usually insure the named insured and a mortgagee. Under a standard or union mortgage clause, the insurer agrees to a separate contract with the mortgagee and that acts by the named insured/mortgagor do not effect coverage to the mortgagee. In SWE Homes, LP v. Wellington Ins. Co., 436 S.W.3d 86 (Tex. App.—Houston [14th Dist.] 2014), the court of appeal was presented with the question of whether a standard mortgage clause in a residential insurance policy provides coverage to a mortgagee for a loss by fire when the policy also contained a vacancy clause and the mortgagor had left the property vacant.
Mortgagee SWE Homes, LP appealed from the trial court's grant of summary judgment favoring insurer Wellington Insurance Company, by which the court held that SWE's loss was not covered. Edgar Sadberry purchased a residential property with a mortgage from SWE. He bought a Texas Dwelling Policy from Wellington covering the property and naming SWE as the mortgagee. The effective dates of the policy ran from August 11, 2010, until August 11, 2011. The policy covered losses from various hazards including fire. It further contained a mortgage clause, which read in pertinent part as follows: "We will pay for any covered loss of or damage to buildings or structures to the mortgagee shown on the declarations page as interests appear...d. If we deny your claim because of your acts or because you have failed to comply with the terms of this policy, the mortgagee has the right to receive loss payment if the mortgagee."
The policy also included a vacancy clause, which stated: "During the policy term, if an insured building is vacant for 60 consecutive days immediately before a loss, we will not be liable for a loss by the perils of fire and lightning or vandalism or malicious mischief. Coverage may be provided by endorsement to this policy."
Sadberry's property was damaged in a fire apparently set by an unknown arsonist on December 23, 2010. Sadberry made a claim on his insurance policy, but after he admitted the property had been left vacant for over a year prior to the fire, Wellington denied the claim under the policy's vacancy clause. SWE then filed a claim pursuant to the mortgage clause. When Wellington failed to respond, SWE filed suit. In its motion for summary judgment, Wellington argued that there was no covered loss—as required for a claim under the mortgage clause—because the property had been left vacant for over sixty consecutive days immediately before the loss occurred. In response, SWE argued that under the policy, coverage for the mortgagee could not be defeated by the mortgagor's actions triggering the vacancy clause when SWE had no knowledge of those actions. The trial court granted Wellington's motion. Read More
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| FC&S Ask the Experts |
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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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