Summary: A standard feature of property insurance forms (commercial and homeowners) is coverage for direct physical loss of or damage to covered property caused by or resulting from aircraft or vehicles; these causes of loss apply under both named perils and open perils policies. The coverages were originally part of the extended coverages that first expanded the scope of the fire policy. Following is a discussion of these causes of loss, with particular attention to commercial property forms. Although some of the cases noted herein are older, none has been overturned; all remain good case law.

Topics covered:
Introduction
Physical contact a requirement under policy language
Physical contact not a requirement

Introduction

The differences between the commercial property forms and the homeowners forms when it comes to aircraft and vehicles as causes of loss are as follows: the ISO commercial property causes of loss forms (basic form and broad form) specifically restrict coverage to loss caused by “physical contact” of an aircraft or vehicle with the described property or with the building or structure containing the described property. The current homeowners policy forms do not have this specific requirement, simply listing aircraft and vehicles as covered perils. The homeowners forms have definitions for aircraft and motor vehicles; the commercial property forms do not. And, the commercial property forms note that loss or damage caused by vehicle owned by the named insured or operated in the course of his business is not covered; the homeowners policies do not list this restriction.

An example of the breadth of the homeowners coverage for loss by vehicles can be found in Bly v. Auto Owners Ins. Co., 437 So. 2d 495 (Ala. 1983). The court held that damages sustained by a homeowner from vibrations caused by heavily loaded logging trucks running on a nearby road were covered because they were direct loss from vehicles. The court said, “Although the policy does not mention physical contact, the insurer insists that direct loss from vehicles requires physical contact between the vehicles involved and the property covered. We find that the word 'direct' means 'immediate' or 'proximate' and is not synonymous with physical contact…[D]irect loss from vehicles means that a vehicle (or vehicles) must be the proximate cause of the loss.”

Physical Contact a Requirement under Policy Language

The following cases present a short but relevant summary of valid legal thinking concerning commercial property, the aircraft and vehicle causes of loss, and the requirement of physical contact.

In H.R. Weissberg Corp. v. New York Underwriters Ins. Co., 272 A.2d 366 (Md. App. 1971), the decision turned, in part, on whether there was physical contact when the boom of a crane collapsed during the demolition of a building. The boom hit and damaged the insured's building, and the question was whether the boom, which could be removed from the crane, was enough of a part of a vehicle so that its contact with the damaged building would satisfy the contract provision. The Maryland Court of Appeals held that coverage applied. The court said that “to exclude this loss because contact was only with the boom would be similar to excluding loss caused if a tractor-trailer loaded with piling jackknifed and the projecting piling, but not the trailer, damaged a building. The difference is simply one of degree.” The case implies that in some instances, damage without actual physical contact by the vehicle would be covered, even where the policy states that coverage only applies in cases of physical contact.

A court refused to find damage by vehicle in George v. Mississippi Farm Bureau Mut. Ins. Co., 168 So. 2d 530 (Miss. 1964) when a building collapsed because a bulldozer moved loose dirt and sand into a ditch close to the wall of the building, and the weight of the material pushed against the wall. The bulldozer came within six or eight inches of the structure during this operation but never actually touched it. After the ditch was filled, the machine operator noticed a crack in the building. The building collapsed the next day. The court said, “Here the plain unambiguous terms of the insurance contract required actual physical contact of the vehicle with the building before there could be liability therefrom. There is no evidence the vehicle actually contacted the building. . .[I[t is our opinion. . .the language used in this exclusionary clause is so clear and unambiguous that it must be construed as requiring an actual contact—that is, touching—of the building by the vehicle."

Although there was physical contact by a vehicle (a boat) with the insured's building in Madison Block Pharmacy, Inc. v. United States Fidelity and Guaranty Co., 620 S.W.2d 343 (Mo. 1981), the contact was not the proximate cause of all damage that the building suffered. The building was a pharmacy located in Kansas City, Missouri. On September 12 and 13, 1977, enough rain fell on Kansas City to cause four or five feet of flood water to surround the building. The person operating the boat steered the boat through the front door of the building, letting the flood water enter. The parties stipulated that the damage by the boat to the front door was covered under a glass coverage endorsement, and the dispute concerned the losses that occurred when the water entered the building. The policy excluded loss caused by, resulting from, contributed to or aggravated by flood. Finding this exclusion to be unambiguous, the court held that there was no coverage for the ensuing loss.

The court in Backer v. Newark Ins. Co., 305 N.Y.S.2d 858 (NY Sup. Ct., App. Div. 1969), held that there was no actual physical contact by a vehicle when the insured's building was damaged while a boiler was being pulled through a doorway by a truck to which a cable was attached. The damage occurred when a barrel that supported a beam or upright to a beam was dislodged; this caused the roof to sag some ten inches. The insured argued that the term vehicle included "every accessory piece of equipment attached to the vehicle." The court found that the term "vehicle" was not ambiguous and refused to apply the insured's definition to the construction of the policy. Perhaps the difference in interpretation between this case and Weissberg, discussed earlier, was the nature of the equipment that caused the damage. Whereas a crane cannot effectively be operated without a boom, making the boom an integral part of the machine, a cable is more remotely related to the day-to-day operation of a truck. The question of relatedness to the vehicle is one of degree to be decided based on the facts of the particular case.

Physical Contact Not a Requirement

A building loss caused by sonic boom was covered in Alexander v. Firemen's Ins. Co., 317 S.W.2d 752 (Tex. Civ. App. 1958). The evidence showed that the jet had been flying at low altitudes and supersonic speeds, causing a sonic boom that propelled shock waves onto and against the lumber warehouse. The girders beneath the building were unseated and the building immediately collapsed. However, the policy did not require physical contact by the aircraft. Instead, the policy stated: "[I]nsurance provided under the extended coverage provisions shall include direct loss by. . .aircraft. . .Loss by aircraft shall include direct loss by falling aircraft, or objects falling therefrom.” The insurer argued that coverage for damage by aircraft was limited to falling aircraft or objects falling from aircraft. The court held otherwise, finding that the words “include” and “including” are generally employed as terms of enlargement, not as terms of limitation or enumeration. Since these words of enlargement were used in the policy, coverage for loss by aircraft encompassed any loss proximately caused by aircraft. (In 1958, note that the coverage forms excluded sonic boom from explosion coverage. Today, the insured could pursue the same loss as one caused by explosion if coverage under the peril of aircraft were denied.)