Installation Floater—Subcontractor's Vandalism Loss

Q

Our question concerns a dispute as to whether wiring installed by our insured, an electrician covered by an installation floater, is covered property. The electrician was installing the wiring in an apartment building under construction when, unknown to him, the wires in several units were cut and then refastened to the studs so that the cuts were hidden behind the fastening clips. The insured was not yet finished with the project when the vandalism occurred. He had not yet connected the circuit breaker box and also had other finishing work to do. 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, once it was installed and vandalized. We disagree. As you can see from the enclosed policy, covered property is defined as “materials (including labor) and supplies…to be used in the installation…while: At a job site.” Since the insured's installation work was not completed when the loss occurred, we contend that the damaged property fits this definition. May we have your thoughts?

South Dakota Subscriber

A

The insurer appears to take the position that coverage ceases once material and labor have been used in an installation at a job site. However, the language of both the covered property provision and the “when insurance ends” provision control that determination and, in this case, are in the insured's favor. The “when insurance ends” clause of this particular policy states that the insurance provided by the form ends at the earlier of acceptance by the purchaser or when the property is put to its intended use. The insurance was still in effect because neither of these events (nor cancellation, expiration, or thirty days after completion) had taken place at the time of loss. Also, as you noted, the insured's work was not completed when the loss occurred, so the wiring that had been installed was still covered property.

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