QUESTION
If a material damage policy states:
"This Policy extends to cover any Insured Property (except stock) whilst temporarily removed within New Zealand and whilst in transit to and from that place."
and
“temporary removal” means removed for a particular purpose or reason, with the intention that the property be returned to the place from which it has been removed once that purpose or reason has been served."
Is there any need for a client to have AINZ cover for portable tools of the trade if they travel from their home workshop
each day?
EXPERT ANSWER: Crossley Gates, Glaistor Keegan
I understand the risk associated with insured property (portable tools) regularly transported to different locations on a temporary basis is higher than the risk of static insured property at the insured site. This leads to the need for a separate product at, presumably, a higher premium rate to cover this. Hence Jeff's view that this how it should be.
There is no issue with this, but both the MD Policy and the Portable Tools Policy must be drafted to ensure the cover for portable tools is forced into the intended policy.
It looks to me that there is a drafting gap in the Temporary Removal extension in that it should not only exclude stock, but also portable tools. Presently, it doesn't and I think it is arguable that the current drafting is not sufficiently watertight to exclude portable tools. In my view, this drafting needs to be fixed.
In the meantime, I suggest it would be brave for a broker to rely on this unclear drafting to advise a client not to take the Portable Tools Policy if it is a risk that needs to be covered. A claim under the MD Policy is likely to be contested by the underwriter. Is it in the client's interests to face a dispute like this?
