Materials Held for Sale

January 9, 2013

We are handling a theft claim under a CP 00 10 04 02 and CP 10 30 04 02. The insured is a large commercial roofing contractor with multiple locations across the state. At one of the locations the insured has a warehouse type building where they store materials in preparation for jobs and where they store excess material that was left over from previous jobs. Our claim deals with numerous rolls of roofing material that were being stored on the yard (outside, but in close proximity to the building) that were left over from a recent job. The insured found a broken lock on the front gate and discovered the roofing material was gone. We believe it is clear this is covered property; however, our internal disagreement is on the application of Limitation 1. d. 1.

 

We are dealing with building materials not attached to the building and that were stolen, but d. 1. says that the limitation does not apply if the building materials are held for sale by the insured. It is unclear what “held for sale” means. The insured does not sell the materials as a retailer and uses the materials only for specific jobs. The material is not for sale outside of it being included in a job where the insured will also perform labor. It is the majority opinion here that the materials we are dealing with were held for sale and that the limitation would not apply and the materials would be covered.

Virginia Subscriber

These materials are used in the insured's business but are not sold by the insured, so they would not meet the requirements of the exclusion to the limitation. Materials held for sale would be those that the insured actually sells to customers as opposed to materials the insured uses to complete its work. The limitation should apply to the situation you describe.

 

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