We are not in agreement with the company on the loss adjustment. We contend that the proximate caused of loss was fire, admittedly caused by wear, i.e., the rubbing of the harness against the tank.

Our understanding of the wear and tear exclusion is that, for example, there would be no coverage had a claim been presented for a worn out wiring harness. However, we believe damage caused by the fire should be covered.

Arkansas Subscriber

A

The purpose of the wear and tear exclusion in property coverage policies is to eliminate insurance recovery in situations where claim is made on property which has been damaged through normal use, abuse, or has simply been “used up.”

The tractor and the wiring harness are undisputedly covered property. Fire loss is unquestionably covered. As you state, the insurance company is relying on the exclusion which eliminates coverage for loss caused by “wear and tear, marring or scratching, deterioration, inherent vice, latent defect or mechanical breakdown” to deny coverage.

This then becomes a question of what damage was caused by wear and tear and what damage was caused by fire. If only a small portion of the wiring harness was rubbing against the fuel tank and was responsible for causing the fire, only that portion of the harness would be deductible from the loss recovery. On the other hand, if the entire harness was rubbing against the tank until it was worn out, then perhaps the entire harness is excludable.

This is analogous to damage by mechanical breakdown in the following circumstance: suppose an element of the fuel line breaks down mechanically, allowing fuel to spew from the engine, causing a fire which totally destroys the tractor. Only the specific part of the fuel line which mechanically broke down is eliminated from coverage; the remainder of the tractor, including the portion of the fuel line not involved in the breakdown is covered for the resulting fire damage.

If a worn out part of the wiring harness caused the fire which damaged the remainder of the harness and tractor, only the actual part of the harness involved in causing the fire is excluded. It becomes a matter of establishing an ACV for the parts involved.