Property Damage Coverage under Real Estate Operations Endorsement

October 21, 2013

We insure a real estate broker on a Commercial General Liability Coverage Form with a Limitation of Coverage Endorsement for Real Estate Operations.

The insured was listing a vacant foreclosed property for Fannie Mae. The listing's buyer was also represented by an agent from our insured real estate broker. While showing the property, the toilet was flushed and continued overflowing after the agent left the property. The unit below sustained water damage as a result of the incident.

The limitation of coverage endorsement limitscoverage to the operation, maintenance, or use of the following:

2. Premises listed with you for sale or rental, if:

a. You do not own, operate, manage or rent the premises;

b. They are not in your care, custody, or control; or

c. You do not act as agent for the collection of rents or in any supervisory capacity.

Would this endorsement cover the damages caused to this property for this loss, or would this be excluded under: property damage to “premises you sell, give away or abandon, if the 'property damage' arises out of any part of those premises”?

Ohio Subscriber

Assuming that the Limitation of Coverage Endorsement for Real Estate Operations in question is CG 22 60 12 07 and that the damaged unit was not part of the insured's real estate operations, the endorsement should apply to the damage as long as the realtor never actually owned, rented, or managed the premises where the damage occurred. The other issue that could arise is whether the property was in the care, custody, or control of the agent. If the damage occurred after the realtor left, and the realtor does not manage or own the property, care-custody-control should not interfere with coverage via the endorsement. Otherwise there may be a problem with coverage.

 

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