An insured is building a new home and plans to hire a moving company. If the moving company damages any of their personal property, is that covered under the Homeowners Policy Special Form 3?
Q: An insured is building a new home and plans to hire a moving company to put their property in a storage facility until their home is built. I understand that my insured’s personal property is covered while being moved to and in the storage facility. If the moving company damages any of their personal property, is that covered under the Homeowners Policy Special Form 3 (HO3)?
Response 1: There can be differences in coverage depending on the form, so I’ll address your question by referring to the 2011 edition of the HO3. There is coverage for the insured’s property while the residence is “being repaired, renovated or rebuilt,” but it doesn’t say while it is being “built.” Many carriers offer an endorsement to the HO policy providing coverage for a dwelling under construction.
You would need to refer to that endorsement to assure that coverage is being providing for the personal property in storage. Having said that, the HO3 provides only named peril coverage for personal property. If the property were stolen, burned or any other named peril, that endorsement might provide coverage.
Also, when moving home, contents are frequently dropped or broken. You might find that the endorsement will not cover that type of damage. Typically, the moving company should have liability coverage for damage to property in their care, custody and control.
First, look at your policy to see if there is coverage at all for the personal property in storage. Second, ask the insured use a reputable mover who will be responsible for any damage they may cause to the property.
Response 2: What is the cause of loss? If the vehicle flips or burns there is coverage. If the property is simply dropped by the movers, there is probably no coverage. Coverage would apply only if the damage was caused by a covered peril. Otherwise, the insured would need to pursue reimbursement from the moving company.
Response 3: If you have a HO3, it only covers named perils on contents. Many of the things that can happen while moving won’t be a covered peril. You need a special form for contents, either via an endorsement to an HO3 or an H05.
Response 4: There have been a lot of arguments over the years about whether damage to personal property during transportation on a vehicle was properly described as "vehicle damage." But even if that question is resolved to your satisfaction, there are a lot of things that can happen to property in transit which are not included within the list of perils for personal property under the HO3. I would recommend that your client purchases some sort of open perils coverage.
This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.