A claim has been presented to us for payment resulting from a loss of antiques and collectibles due to a fire at an antique mall. The insured is seeking payment under the homeowners policy coverage for unscheduled personal property.
The insured indicates that some of the property was inherited and the rest was accumulated for household use over a period of time. It was being sold to allow for more room in their house. There were over 100 items that had been left on consignment to be sold. The insurer believes that the items fit within the definition of “business property.” If the property is viewed that way, all that the insured can collect is the $250 off-premises business property limit. In your opinion, would coverage be limited to $250?
Illinois Subscriber
Although the insured had a profit motive in leaving these items for sale on consignment, they were not property used by the insured in a “business.”
Leaving the items on consignment was similar to having a yard sale, only over a longer period of time. It is doubtful that a court would find items sold at a yard sale, if conducted once a year, to be business property. Similarly, the “business” label should not be attached to household items sold under a one-time consignment agreement—at least when they were originally acquired for nonbusiness purposes and sold merely to make more room in the home. Of course, if the insured engaged in a sideline of buying and selling antiques, the business limit under the homeowners policy would apply.
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