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  1. Lightning damage | Ask PIA

    Lightning hit an electric line leading to an air-conditioning unit on the roof of a building. The unit was damaged. The company claims Exclusion 2.a. applies, relating to “artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances or wires,” so the carrier is denying coverage. The insured...

    Your client is right. Lightning is naturally generated electrical current that can cause power surges that damage equipment, as it did to your client’s air-conditioning unit. Lightning damage is covered without qualification under the lightning peril.

  2. Perishable stock—spoilage coverage endorsement | Ask PIA

    We have a pet shop insuring its property with the Cause of Loss—Special Form perils. Suppose a power or equipment failure causes $10,000 worth of tropical fish to die. Would this loss be covered?

    This loss most likely would not be covered under the ISO Cause of Loss—Special Form (CP 10 30) due to several exclusions. The following B.1.e. Utility Services exclusion eliminates coverage for power failures resulting from equipment that is not maintained on the premises (regardless of cause): originates away from...

  3. Functional valuation | Ask PIA

    At an E&O seminar I attended, the instructor mentioned the “functional replacement cost” endorsement. Could you explain the use of this endorsement?

    You would use the Functional Building Valuation Endorsement (CP 04 38) to endorse an ISO Commercial Property Policy. There also is a functional Personal Property Valuation Other Than Stock endorsement (CP 04 39). In these forms, a functional replacement valuation replaces the actual-cash-value basis of valuation in the event of...

  4. Medical equipment—inland marine or commercial property form? | Ask PIA

    My client leases space but owns and operates a large medical-imaging machine, valued at about $900,000, which is installed at his leased premises. I quoted property coverage for him under an inland marine policy. There was about a $1,000 difference in the premiums we quoted. How should this coverage be...

    The Nation-Wide Marine Definition adopted by the National Association of Insurance Commissioners, as it currently functions, provides a guide for the statistical reporting of policies written as either fire and casualty insurance or marine insurance. The preamble to the definition states: The purpose of this instrument is to describe...

  5. Goods held for delivery | Ask PIA

    We insure a manufacturer under an ISO Building And Personal Property Coverage Form. The manufacturer invoiced his customer on March 31 for $200,000 in stock, with an agreement that the stock would be held for delivery in June. The invoice states that title passes on the invoice date. If there...

    The Uniform Commercial Code permits the buyer and seller of the personal property to agree as to when title will pass between them. If title to the goods does not pass until delivered, the goods would remain covered as “stock” (under Covered Property—b. Your Business Personal Property), defined as “merchandise...

  6. States with statutory disability | Ask PIA

    We insure a business that is a one-person corporation. He will be working in North Carolina for a while. Does North Carolina have a statutory disability plan we should be aware of?

    No. Only six jurisdictions require statutory disability coverage: California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island. (New York is the only system completely separate from unemployment insurance.)

  7. Workers’ Adjustment and Retraining Notification Act | Ask PIA

    In comparing employment practices liability policies, I have noted references to the federal Workers’ Adjustment and Retraining Notification Act. Sometimes violations of this act are excluded from coverage. What are an employer’s responsibilities under WARN?

    According to the U.S. Department of Labor, WARN became effective in 1989. It requires employers with 100 or more employees to provide 60 days’ notice in advance of plant closings and other mass layoffs covered by the WARN. Notice must be given to the workers (or their union), a state’s...

  8. Waive DOL overtime | Ask PIA

    Can my employees waive their right to overtime?

    No. The overtime requirement may not be waived by agreement between the employer and employees. Furthermore, while an employer is permitted to have a policy in place whereby overtime work is not permitted, such policy would not override an employee’s right to compensation for compensable overtime hours that are worked,...

  9. The mailbox rule | Ask PIA

    My client received a notice of cancellation for nonpayment and mailed the premium before the date of cancellation. If the payment isn’t received until after the date of cancellation, can the carrier cancel the policy?

    Unless there is a policy provision to the contrary, the mailing of the premium establishes the day the payment was made. This follows a legal doctrine called “The Mailbox Rule” or “Postal Acceptance Rule.” Under this doctrine, if an offer is sent by mail, then it invites acceptance through the...

  10. ’Customer’s auto’ | Ask PIA

    Our client, a business that installs car radios, has a garage policy which includes garagekeepers coverage. One night, he gave an employee permission to leave his car in the garage overnight. The garage was broken into and the car was stolen. Is there coverage for the employee’s car under the...

    Under these circumstances, the employee’s loss will not be covered on the employer’s garagekeepers coverage. Coverage is limited to a “customer’s auto,” which is defined as follows: “Customer’s auto” means a land motor vehicle, “trailer” or semitrailer lawfully within your possession for service, repair, storage or...

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