District of Columbia Subscriber

The answer is this question is not as simple as one would hope. There are arguments justifying a single, as well as a multiple, deductible, and approach. It may be argued that the declarations page lists each location separately with its own limit of insurance and premium, and contains no stated blanket limit. However, this may be analogized to the homeowners policy which also lists separate limits. If hail damages both house and detached garage in a single occurrence, one deductible will be applied. Even if the BOP lists each building with a separate coverage limit, the overall policy deductible is stated as $1,000, with no mention that it is to be applied to each building.

This points to an ambiguity, which, at law, will be interpreted in favor of the insured. Further, since the policy states a $1,000 deductible, the insured's “reasonable expectations” may be such that this deductible is to be applied per occurrence. The insured could argue that a situation could arise in which a loss could exceed $20,000 in order for him to collect under the policy.

On the other hand, the rate for the buildings takes into account a $1000 deductible for each building. However, this is “outside” the contract and may not be used to impose terms on the contract. By the same token, the ISO commercial lines manual's rule regarding the BOP is that the policy cannot be used to provide blanket coverage — coverage is provided separately for each building or personal property at each location. The commercial lines manual, however, cannot be made a part of the policy.

This situation points out a problem in writing several buildings on a BOP, at least so far as application of deductible is concerned. Appropriate drafting of the policy would go a long way in avoiding such disagreement in the future.