COMMERCIAL LINES
IS 'PERMANENTLY INSTALLED' EQUIPMENT COVERED UNDER BUILDING OR PROPERTY? Q: Is bolted-down equipment covered as part of the building on the business owners policy? A laundromat had a fire claim which included significant building and business personal property damage. We have always insured the washing machines and dryers as building coverage, since most of them are permanently bolted down. The carrier is contending that all washing machines and dryers are considered personal property. The client has $569,000 of building coverage and $50,000 of business personal property coverage, so this is a big problem.
A lesson to be learned: In cases like this, claims people frequently make this mistake. If you rely on this policy language to allocate values, it's a great idea to mention it to the underwriter in a memo when you write the coverage. Waving that memo at the adjuster at the time of a loss will keep the problem from developing. Response 2: I would argue that the underwriter knew what kind of business this was and you clearly would have increased the business personal property limit if these machines were considered business personal property.
The policy says "permanently installed I'd also argue that these machines are used to machinery and equipment" are considered service the building: part of the building. This is an undefined term and should be interpreted in a very broad Section 1 – Property way. A. Coverage Response 1: You've already nailed it. If they're permanently attached, they qualify (5) Personal property owned by you as "building" or if they are laundering that is used to maintain or service the equipment, they're also considered building. buildings or structures or the premises, The language in both cases is a little loose, including: but I don't think a judge would waste too much time with an insurance company's (a) Fire extinguishing equipment; argument that they aren't "building" items. Press the claim department for a specific (b) Outdoor furniture; ruling on these two points and I think the problem will disappear. (c) Floor coverings; and 22 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
