Answer: In the ISO Installation Coverage Form IH 00 73 12 13, covered property means property situated as specified in the Declarations for installation at any described premises.

Covered property does not include property on the insured's premises unless it is intended to be installed at the described job site. It also does not include any tools and equipment. It does not include any property that has been accepted by the purchaser, or any property in which the insured no longer has an interest.

Based on the coverage wording, if the materials are designated to a specific job site that is scheduled in the Declarations, then the installation floater should cover their loss. Otherwise, the loss would fall under the BPP as Personal Property of Others. If the materials are not owned by others, but by the insured, then they would be “stock” or personal property owned by the insured and used in their business.

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Installation floater or builders risk?

Question: My question concerns a coverage dispute as to when coverage on an ISO installation floater ceases. In this scenario, a contractor was constructing a structure. They were hired to construct a building for a landowner. They installed 75 percent of the roof trusses to be installed. That evening, high winds damaged the structure. Coverage was denied as those roof trusses were already installed and thus, coverage should be afforded on a builders risk policy at that point. The floater states, “Covered property does not include a. property on your premises unless intended to be installed at any described job site.”

Since these roof trusses were no longer intending to be installed (they had in fact been installed), coverage was not afforded. What is your opinion as to when coverage ceases on the installation floater and needs to be covered under a builders risk form?

— Texas Subscriber

Answer: We agree that the loss would not be covered by the installation form. The ISO Installation Coverage form describes “covered property” as “property situated as specified in the Declarations for installation at a described premises.” So, once the property is installed, it is no longer for installation, but is part of the building or structure, which falls under the Builders Risk form. When the property is installed is when the coverage on the installation floater would end. If the other 25 percent of the trusses that were not installed were also damaged, they should be covered by the installation floater.

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Once building materials have been installed, they are part of the building or structure, which means a loss would fall under the Builders Risk policy. (Photo: iStock)

Installation floater and covered property dispute

Question: This concerns a dispute as to whether wiring installed by our insured, an electrician covered by an installation floater, is covered property. The insured was installing wiring in an apartment building under construction when, unknown to him, the wires in several of the apartment units were cut, perhaps by vandals. The wires were then refastened to the studs so that the cuts were hidden behind the fastening clips. The damage was not discovered until the electricians began their finishing work and the apartments had already been sheet rocked and painted.

The insurer is taking the position that the property that was damaged belonged to the general contractor and not to our insured since it was installed. We believe that the floater language makes the wiring the property of the insured. The floater defines covered property as “materials (including labor) and supplies … to be used in the installation … while at a job site and intended to become a permanent part of the project ….” Since the insured's installation work was not completed when the loss occurred, we contend that the damaged property fits this definition. What is your opinion?

— South Dakota Subscriber

Answer: Covered property and property not covered in an installation floater are described in the floater. The insured's materials, supplies and equipment that will be (and are being) installed in a project are covered property; property not being installed, like buildings, land or completed projects are not covered property. Coverage under an installation floater is very broad; that is, coverage is on an open perils basis, subject only to the exclusions listed on the policy. Since there seems to be no dispute that this was a covered cause of loss, the question of whether the wires are covered property is crucial to the coverage issue.

The insurer appears to be taking the position that property is no longer covered property once it has been used in an installation at the job site. That is far too strict a reading of the definition of covered property, and it is in opposition to the following crucial aspect of an installation floater.

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The floater has a provision that describes when the insurance ends. That clause notes that the insurance ends at the earliest of the following times: the policy expires or is cancelled; the purchaser accepts the covered property; the insured no longer has an insurable interest in the covered property; the insured abandons the installation project with no intent to complete it; the project has been completed for more than thirty days; or the covered property is put to its intended use. You stated that the insured was not finished with his work and was actually testing the wiring when the damage was discovered. Clearly, the general contractor (or the building owner) had not yet accepted the work of your insured as a completed operation, the wiring was not put to its intended use, and none of the other events had occurred. So, the insurance under the installation floater had not ended.

Based on the facts that the insurance had not yet ended and that the insurer has narrowly interpreted a definition that can reasonably be seen in a different way, we believe that the installation floater would apply to this claim.

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Installation of carpeting over hardwood

Question: I have a coverage question that has arisen with a partial loss house fire on an AAIS Form HO3. The home was an older dwelling that had hardwood floors original to the house that had been covered by wall-to-wall carpet. All hardwood flooring was ruined due to the water used to extinguish the fire. The insured is demanding that we lay new hardwood flooring throughout the house and install wall-to-wall carpet directly on top of the new hardwood flooring. At first glance, this seems ridiculous because we do not want to install two finish layers of flooring (not to mention the fact that we would be nailing tack strips into that new hardwood flooring to install the carpet). However, after some reflection, I understand the insured's point of view. The house would potentially have a lower value without hardwood flooring, and both flooring surfaces were in place immediately prior to the loss.

I cannot find any policy language that would speak to this issue, other than the fact that carpet would be depreciated to ACV. Do you know of any exclusion or policy language that would speak to this issue? It seems logical that we would not have to install more than one finish layer of flooring (or any other surface in the home, for that matter). However, barring policy language or precedent, I cannot find any basis for denying the request for both hardwood flooring and carpet.

Thanks for any thoughts you may have.

— Pennsylvania Subscriber

Answer: There is nothing in the AAIS policy that precludes restoring the insured's hardwood floor then putting wall-to-wall carpet over it. It is what he had before the loss, and in order to properly indemnify him he is entitled to both hardwood and carpet. Many people add wall-to-wall carpet for aesthetic purposes or warmth. The insured is not gaining anything he did not already have, although it is two finish layers.

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