We have a claim where two businesses in which our insured was involved were closed and the items moved to our insured's home for storage. The items were used in business and many of the items did not belong to our insured. The items had been moved to our insured's home “maybe two weeks” according to our insured in an EUO, and they were to be moved out, as the items took up a large part of the living room.

Questions: in Coverage C, is property owned by a business considered “owned by a person”? A corporation is a legal “person”; this was not a corporation. Is property that belongs to a business, used primarily for business, not our insured's, eligible for the $2,500 coverage? This property was used exclusively for the business until the business dissolved.

North Carolina Subscriber

The policy covers personal property owned or used by (emphasis added) an insured. Therefore, the insured doesn't necessarily have to be the owner of the property; this leads us to the use of the property. In order for business personal property to be covered, the property must be used primarily for “business” purposes and business is a defined term. The policy considers a business to be: a trade, profession, or occupation …whether full time, part time or occasional; any other activity undertaken for money or other compensation…with a few exceptions.

The equipment wasn't owned by the insured, but had it been used by the insured? If the insured was not using the equipment but was merely storing it, then there is no coverage.

If the insured was using the equipment, was it being used primarily for business use? Say the businesses were carpet-cleaning businesses; the equipment is moved to the insured's house for temporary storage since the businesses closed. If the insured uses the rug cleaning equipment to clean his rug, his sister's, brother's, in-laws, or neighbor's rugs for free when the loss occurred, that is not using the equipment primarily for business use and there is no coverage.

However if the insured was using the equipment in a business sense, and was collecting payment from the customers, then the equipment was being used by the insured for primarily business purposes and there is coverage.

One final twist is that if the insured was part owner of the equipment there may be some proportional coverage. The other business owners should call on their carriers as well.