Rentals, Scratched Glass and Window Cleaners

An insured has 15 rental properties, none more than four units. An insurer covers them under 15 dwelling policies and has endorsed his homeowners policy to extend liability coverage to each of them. The agent has recommended commercial insurance, including a CGL policy rather than an HO endorsement, as he feels it is better coverage. Insuring it commercially will cost 30%–40% more so, of course, the insured wants keep the coverage like it is. What do you think?

Coverage games are played all the time to save a buck here or there. There are several Virtual University articles on, as Joe South put it in his song from the 60s, the “games people play”—for example, by insuring corporately owned vehicles on a personal auto policy or insuring daughter Bitsy’s car on daddy’s business auto policy.

This is certainly someone with significant business exposures who appears to be relying on personal insurance products to address a large-scale lessor’s risk. If the HO and dwelling forms are comparable to ISO, he most likely has a number of potentially uninsured or underinsured exposures. In addition, he sure seems to be a candidate for incorporation who desperately needs to talk to an attorney.

One probable coverage gap is his exposure to claims for invasion of privacy and wrongful eviction. Is his HO policy endorsed to provide personal injury coverage? At what limit? What about umbrella coverage, or is he relying on his $100,000 HO policy limit? What about the business exclusions in the HO policy, particularly given that the exception to the rental exclusion only applies to occasional rentals?

For other potential problems, read the full story on the Big “I” Virtual University.

During the past year, the VU’s “Ask an Expert” service has averaged a question about every six weeks regarding CGL coverage when glass is scratched by a contractor. One claim involved $100,000 in damage to windows of a high-value home.

The insureds have varied from window cleaners to painters to brick masons who were either working directly on the window glass, the frame or surrounding areas. If the glass is inadvertently scratched, is there any CGL coverage?

Often these claims are denied under the ISO CGL policy, citing “care, custody or control.” First, note that the “CCC” exclusion in the ISO CGL applies only to personal property, not real property like building glass.

If an exclusion is correctly cited, it is most often either j.(5) or j.(6), both of which apply to damage to “that particular part” of the property being worked on. The key word in both exclusions is “on.”

For j.(5), the exclusion applies to property “on which” operations are being performed. For j.(6), the exclusion applies to faulty workmanship “on” that part of the property.

In some cases, the exclusion is valid; in others, it is not. To examine eight different claims scenarios that distinguish between what is and isn’t covered, read the full article on the VU.

An insured owned an expensive home with numerous custom windows. He hired a window washer with 25-plus years experience to clean and wash the windows. While removing plaster and varnish from the windows, he scratched most of them. The insured subsequently learned that the window washer was uninsured. Does the insured have any coverage under his homeowners policy?

If such claims are denied, it is typically by reliance on one or more exclusions that include terms like “marring” or “scratching.” However, a word in isolation may mean something entirely different from a word within the context of a list of exclusionary terms.

Without getting too academic, there are a couple of legal terms that might have bearing on whether or not there’s coverage for this type of loss. These terms are “ejusdem generic” and “noscitur a sociis.” While they may sound a little esoteric, they can be invaluable in interpreting policy coverages involving claims as varied as hijacking and sexual assault.

For a more complete discussion, go to the VU.

Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University, an online learning center for agents and brokers. Follow the Virtual University on Twitter at Twitter.com/BigIVU.