Off-Premises Coverage and “Owned, Leased or Operated” Exclusion

Q

Our commercial property policy (CP 00 10) insured went to a customer's location to answer a service call on a piece of damaged equipment. While at the customer's shop, a piece of equipment leased by our insured and brought with him on the service call fell off a ledge and was damaged to the amount of $2,900.

We believe there is coverage under the property off-premises provision of the policy; the insurer is denying the claim under this same provision stating that the insured was “operating” at this location while making the service call.

Is this denial of coverage appropriate?

Ohio Subscriber

A

The commercial property policy (CP 00 10) specifically includes leased equipment as covered property where there is a contractual responsibility to insure that property. If your insured's lease terms call on the insured to provide insurance for the damaged piece of property, the leased item qualifies as covered property.

The CP form's “property off-premises” provision allows the extension of coverage (up to $5,000) to apply to covered property that is temporarily at a location not owned, leased, or operated by the insured. Performing a service call at a customer's premises does not convert that premises to a location “operated” by the insured. The words “owned, leased or operated” connote a control feature that is absent in this instance. Simply coming onto a customer's premises to perform services does not turn control of that location over to the entity coming in. The word “operated” must be looked at in relation to the other words in the provision, and read in that context.

The leased piece of equipment is covered.

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