Hawaii Subscriber

A: It really depends on what the lease says. If after the lease ends the owner of the ground lease obtains ownership of the building, loss of rents coverage is permitted. But, if the building ownership remains with the lessee, loss of rents is not permitted.

On a practical note, even if loss of rents for the land owner is permitted, probably not many underwriters would write the coverage because the land owner has no control over the building. It seems that an underwriter would consider this lack of risk control a serious impediment to writing loss of rents coverage for the land owner—even if it is permitted.

Visiting Is Not Occupying

Q: Our insured owns a home and moved to an apartment in 2011. He does go back to his residence on the weekends. In the fall of 2013, the insured had tenants move into the home. He still goes there on weekends. The home sustained a total fire loss this year. The tenants do pay our insured rent. Does the insured maintain his status as an occupant of the residence? We are dealing with an HO-3.

Michigan Subscriber

A: While the insured visits the house regularly, it is not his primary residence. He spends the majority of his time at the apartment, so that is his dwelling. The home is not owner occupied, it is not a residence premises and coverage does not apply because the home no longer fits the definition of “residence premises”.

Grease Is Not a Pollutant

Q: A grease trap in tenant's insured restaurant rotted out, causing damage to unrented space owned by the landlord. Does grease meet the definition of “pollutant,” and would the pollution exclusion apply?

Massachusetts Subscriber

A: No, grease does not fit the definition of “pollutant,” and the pollution exclusion does not apply to preclude coverage here. “Pollutant” is a defined term in the policy. “Pollutants” mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

A majority of courts now hold that the term “pollutant,” as contemplated by the policy, encompasses something that causes environmental damage. That is not the case in this instance. So, it is our view that calling grease a pollutant is a stretch and due to a reasonable argument being made against applying the exclusion, the benefit of the doubt goes to the insured.

The insured accidentally damaged someone else's property and that is what the general liability policy is meant to cover.