What's average?
Question...
We have a client who has had criminals break in through a locked gate on their yard, and steal a trailer. The trailer was worth $2000 and covered as part of their stock under an MD policy. The excess is $1000 for burglary and $2500 for theft.
The insurers are classifying the claim as a theft claim and declining as it is under the theft excess. We have argued it is burglary as there was a break-in. Insurer©s burglary wording and building/site improvement definitions as follows:-
BURGLARY COVER
You are insured for sudden and accidental loss to insured property:
1. at the situation, or
... Unspecified Locations, caused by theft or attempted theft
(ii) involving physical evidence of violent and forcible entry to, or
exit from, an enclosed building (or part of an enclosed building), or
(iv) of a permanently attached part of
the building by the forcible removal of it.
Definitions:
BUILDING
Any of the following:
(a) any building,
(b) underground and above ground services directly associated with the building,
(c) permanent fixtures and fittings at the building(s), including but not limited to signs, sprinkler systems, wired alarm systems, and wired security cameras,
(d) SITE IMPROVEMENTS,
(e) landscaping, provided that the property is:
(a) owned by you (including joint ownership with others), and
(b) located at the situation at the start of the period of insurance.
SITE IMPROVEMENTS
Site improvements are:
(a) footpaths, driveways, car parks, site roads, and yards, of permanent construction,
... (d) gates, fences.
Building is defined as including yards, gates and fences. But the policy wording states that any word in bold is defined in the definitions section. In the burglary wording the word "building" is not in bold.
Insurer©s argument is, it isn©t in bold so it isn©t defined and the building definition in the definitions section of the policy wording is not the building definition used in the burglary wording of the same policy.
They advise it is instead the common law definition of building, which does not include fences, gates and fenced in yards, and has been tested time and again in NZ Law, therefore this is theft.
We think the ambiguity in the policy wording/definitions is enough that the claim should be considered burglary and would appreciate your feedback regarding this.
Reply... Crossley Gates
The law says a contract is only ambiguous if it “speaks with two voices” after all the primary rules of contract interpretation have been exhausted first, with no success.
Here the contract is clear that the special definitions in the contract only apply if the word appears in bold font. That is not the case for the word “building” in the burglary cover section. Therefore, the special definition doesn't apply. This is clear and not ambiguous. The word “building” will have its ordinary dictionary meaning. That meaning doesn't include yards.
Therefore, although there was violent and forcible entry, it was not violent and forcible entry to an enclosed building. The words of the insuring clause for burglary cover don't apply.
While I agree that this decision is something of a hard call (because there was violence and force), the technical rules of interpretation must apply in order to create certainty and consistency. If the intention all along was to include this claim scenario, then the drafting of the burglary cover would need to change.
Who owns the concrete?
Question...
My client is a hard and soft landscape gardener. He completed a concreting job on a clear day. No rain forecast. Downpour of rain two hours later meant the newly laid concrete is pitted. I don©t believe that he can be held responsible for the rain however it has raised questions as to who owns the poured concrete. No money has changed hands at this point. My client's "insurance lawyer" advises that despite no payment having been made, ownership has definitely passed on to the homeowner. The insurer advises that this is not the case, and my client still owns the concrete that he has poured so this cannot be a PL claim. Any thoughts, opinions would be appreciated.
Reply... Crossley Gates
Your client's insurance adviser is probably correct. In the absence of any express agreement between your client and the owner of the land, the concrete became sufficiently affixed to the land for it to form part of the land and to be owned by the land owner. There is a distinction in law between chattels (personal property) and land (real property). A chattel placed on land does not automatically become part of the land, but something affixed to the land (a structure) does.
I wonder if this point is academic anyway. If we are talking about a PL claim, won’t the concrete be your client's “product” under the policy and any damage to it be excluded (as only liability for resultant damage is covered)?
Damaged panels
Question...
Prior to pouring eight tilt panels, three coats of release agent were applied to existing slab on a Friday prior to scheduled pour first thing Monday morning of the tilt panels. During the weekend it rained and washed off a certain amount of release agent and the result was that the water diluted the release agent.
When the tilt panels were subsequently lifted four of the tilt panels were contaminated. They were unable to be repaired or reused. The contract works insurer has declined claim as it believes it was faulty workmanship. The public liability insurer has declined the claim under defective workmanship, reasoning: whilst the defective workmanship extension provides cover for insured©s products, it does not provide cover for products damaged whilst still in the insured©s possession.
The material damage and stock insurer is looking to decline on this basis:
"That tilt panels would not be considered stock under the policy - for them to constitute stock they would need to have, at some point, been held by the insured and available for distribution. Had they been precast by the insured before being transported to the site, their view may have been altered in terms of whether they would constitute as stock.
"For manufacturing to take place, it would be generally accepted that this would be undertaken at a manufacturing facility. There would normally be a dedicated premises with provisions made to ensure that the associated risks with the manufacturing process were adequately covered off from a risk perspective. Underwriters would be able to assess and understand those risks.
"If they were to fall under stock then exclusion 4g "property in the course of installation, construction, demolition, erection or testing following any of them" has application.
The panels are created on site and form part of the construction of the building and on that bases they would fit within the above exclusion - including any lifting."
Do you agree with the above as we believe that this should be picked up under stock?
Reply... Crossley Gates,
I don't fully understand the terminology around the panels but, in essence, it appears your client made an error in not allowing for the consequences of the rain over the weekend on the release agent. It does sound like faulty workmanship and it appears there is no resultant damage. Therefore, the exclusion of the claim under the contract works policy sounds correct.
In relation to whether the panels are stock, that word is not usually defined in the policy. Therefore, it will be given its ordinary dictionary meaning. The meanings appropriate for this scenario are:
1. a supply of goods kept on hand for sale to customers by a merchant,
distributor, manufacturer, etc.; inventory.
2. a quantity of something accumulated, as for future use: a stock
of provisions.
These paint a picture of goods currently not required but on hand for the future. Therefore, I suggest the MD underwriter is correct to suggest the active manufacture of the panels on a customer's site (I assume) is outside these definitions. I am afraid I don't like your chances.
Getting out
Question...
A client who owns a unit within a body corporate wishes to opt out and arrange his own insurance. His unit is stand-alone albeit he has shared driveway access which remains insured by the body corporate. Is this possible and are there any legal or insurance implications that we should consider when arranging the insurance for this client's property?
Reply... Crossley Gates
Yes it is possible but there is no legal way he can opt out of the Unit Titles Act (Body Corporate). This means he will probably pay a premium twice - once through his body corporate levy to the extent it includes a share of the body corporate's policy and twice when he arranges his separate insurance.
He may wish to do this anyway though if he has concerns about the adequacy of the body corporate's cover (or lack of it).
