Third Party Property Damage Claim

November 30, 2015

We are currently handling a third party property damage claim under Business Owners Liability Coverage Form BP 00 06 01 97. This loss arises out of a fire at our insured location. A claim is being made by a nearby business for the cost to refill its water tank that was used to run its business. During the fire the fire department asked to use its water tank supply in order to help put out the fire at our location. The claimant had to pay to have water shipped in to refill the water tank so that the business could continue to do business as normal.

Would there be coverage to pay for the cost to replace the water in question if our insured is liable in this matter?

Iowa Subscriber

If the insured is liable (and that is a big if), there is no exclusion to prevent coverage. But even if the insured is liable, you have to check to see if the definition of property damage has been met in this instance. Paying to refill a water tank sounds like more of an economic loss as opposed to physical injury to tangible property, and a pure economic loss does not meet the definition of property damage on the form.

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