Question. I have two questions regarding coverage for a wine collection under the ho-3 and ho-5 forms.
- What coverage would apply to the unendorsed home policy if I dropped my $10,000 bottle of wine on the floor and it smashed into a thousand pieces?
- Would the answer differ if HO-15 — Special Personal Property Coverage endorsement was on the policy? (that is, the same as the HO-5 policy)?
— Kentucky Subscriber
Answer. Under the HO 00 03 personal property is named perils, and there is no named peril for clumsiness or dropping objects. Under the HO 00 05, coverage is open perils, except that under coverage C breakage of eyeglasses, glassware, statuary, porcelains and similar fragile articles are not covered with the exception of certain named perils. Glassware is defined by Merriam-Webster as articles made out of glass, so the bottle of wine would fall into this category. Again, clumsiness or just dropping a bottle of wine is not a named peril. If the insured wants the wine collection insured, best to talk to the underwriting department, and see whether they'll allow it to be scheduled.
Question. We insure a wine collection under a valuable articles policy. It's an all-risk policy, offering coverage against physical loss if the valuable articles are lost, damaged or destroyed. There are several exclusions on the policy, including one for wear and tear and deterioration; this exclusion has an exception for an ensuing covered loss.
The corks in several bottles deteriorated, and when the corks went bad, the wine spilled out of the bottles. We think this is a covered loss, but the insurer says that the wine deteriorated as the corks went bad. What is your opinion?
— Maryland Subscriber
Answer. The answer to this depends on how the wine was lost. If the wine simply evaporated or spoiled over time because the corks deteriorated and allowed air to impact on the wine, that is a loss that would be excluded from coverage. But, if the wine spilled out because the corks fell apart or fell out of the bottles, the loss would be covered. Based on your description, the corks deteriorated over time, but the loss of the wine was an ensuing loss due to spillage, which is specifically made an exception to the exclusion. We believe that the loss is covered.
Question. The insured has wine goblets and wine glasses scheduled under the HO 04 61 04 91, Scheduled Personal Property Endorsement. During a dinner party, one of the glasses being used was chipped when a toast was made and the glasses were struck together. The insured is alleging that there is coverage for the damage under collision for fine arts; however, we disagree. Would you please provide your thoughts?
— New York Subscriber
Answer. Collision is often considered to be an impact with an object; Merriam-Webster Online defines it as an act or instance of colliding; clash. “Colliding” is defined as to come together with solid or direct impact. That's exactly what happened with the wine glasses; they came together with direct impact. The loss is covered.
Analysis brought to you by the experts at FC&S Online, the unquestioned authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to have YOUR coverage question answered —visit www.nationalunderwriter.com/FCS.
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