A gentleman retires and closes his business in 2011. He had been in the business of manufacturing high end cigar boxes. He keeps his remaining inventory which includes a large amount of burled wood, teak, and mahogany sheets about the thickness of a sheet of paper used in the manufacture of cigar boxes.

The insurer says that he is only entitled to the business personal property limit of $2,000.00 on his homeowners policy even though he has a replacement cost policy and more than enough in contents coverage.

My argument is he should be entitled to the full replacement cost because once he closed the business the business personal property automatically became his personal property.

Indiana Subscriber

It depends on actual policy language; the ISO HO 00 03 1991 form applies the special limit for business property to property used at any time or in any manner for any business purposes. In this form since the material had been used in business at one time, it would still be business property. However, the 2000 and 2011 forms apply the limit to property used primarily for business purposes; if the property is no longer used for business or even if it is only occasionally used for business, then it is personal property.