Insurance coverage Q&A: When the rug needs to dry
When the drying process of an oriental rug leads to damage, is there coverage?
PropertyCasualty360.com editor’s note: Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. The following letter was edited for length and clarity.
The insured is an oriental rug cleaner that filed a claim after a rug was damaged during the cleaning process. The policyholder hung the rug to dry on wooden pegs, which have small steel pins as part of their structure. These pins caused rust, which then stained and damaged the rug.
The claim has been denied on both the property and liability sides.
The policyholder has endorsements:
- IM 7550 Z 06 04 bailee customer floater coverage dry cleaners and laundry form.
- WB 1166 04 14 voluntary property damage coverage.
- BP0003 0713 businessowners coverage form.
— Virginia Subscriber
According to the policy provision, the loss would be excluded. You cite this as being a gray area, however, even though the rug was hanging to dry after laundering that would be part of the insured’s processing operations. When a term is undefined in a policy, we go to the standard desk reference. Merriam-Webster defines “process” in part as:
2.a.: to subject to a special process or treatment (as in the course of manufacture or film development). b 91): to subject to or handle through an established usually routine set of procedures.
Using this definition we think it is accurate that cleaning of the rug would include the drying process and the rug hanging was part of the processing of the laundry function.
We unfortunately do not see coverage for this loss in the forms you provided.
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