The contractor had inland marine coverage for his tools. However, the contractor had no coverage for the appliances because the appliances were never his property.

We submitted the claim to both the HO 00 03 and HO 00 04 insurers. The HO 00 04 had been written with a separate insurer due to the high contents value in storage. Both insurers denied the claim under the limitation to theft coverage that states that there is no coverage for theft “in or to a dwelling under construction, or of materials and supplies for use in the construction until the dwelling is finished and occupied.”

We believe this loss should be covered somewhere and would appreciate your thoughts.

Michigan Subscriber

A

The theft claim is covered under the HO 00 03 policy. The modifying clause “until the dwelling is finished and occupied” applies only to the theft of building materials and supplies, not to property “in or to a dwelling under construction.” If a comma were inserted between the words “construction” and “until,” then the requirement for completion and occupancy would apply to both the dwelling and the building materials. As it is written—without the comma in that place—the completion and occupancy requirement applies only to building materials and supplies.

The only limitation that applies to the dwelling is that the dwelling must not be “under construction.” The theft did not occur while the building was “under construction” since all structural elements were completed and the windows and doors were locked. Only minor details were left before occupancy could be taken.

The HO 00 04 policy does not cover this loss because it covers contents only, and the appliances—once installed—became fixtures covered as part of the dwelling.