(August, 2006)
Any property insurance coverage form makes references to the various causes of loss that are eligible for insurance protection. These insurance forms often include special terms that are defined in the hope of clearly communicating their coverage intent. The basic dwelling policies used either a named peril or an all perils, except what is excluded approach. Although many perils are referenced, not all of them are defined. Since understanding certain perils depends upon a common rather than a special understanding; this article offers a brief discussion of several sources of property insurance loss. A review of these perils may provide some understanding of the comprehensive nature of the coverage provided under most property forms, including those in the ISO Dwelling Policy Program.
Fire is one of several perils not specifically defined in the Dwelling Policy Program (nor in any other property contract for that matter). Fire has been defined by the courts as "combustion sufficient enough to produce a spark, flame or glow." By definition, smoke is not fire. A fire does not include charring. A fire must produce a spark, flame or glow. Even then an event is subject to interpretation. For an illustration, please refer to PF&M Section 131_C014. "Electrical Arcing" Held Not To Be "Fire" And Loss Therefore Not Covered" in Court Cases.
Not all fires are covered under the fire peril. Over the years, the courts have distinguished between the following types of fire:
· friendly fire
· hostile fire
A friendly fire is one that burns where it was intended to burn.
Examples: A flame on a gas stove; a fire in a fireplace; fire in an outdoor grill.
A hostile fire is one that burns where it was not intended to burn.
Examples: The kitchen drapes; the rug by the fireplace; a tree near the outdoor grill.
Only direct damage caused by hostile fire is covered by the fire peril. The named peril "fire" is fundamental to property insurance and has been thoroughly tested, in its application, to loss situations from the early days of insurance to the present.
Note: Smoke from a hostile fire is considered to be direct damage and is also eligible for coverage.
Example: Scenario one - Judd, whose home is insured under a DP 00 03 Special Form Dwelling Policy, awakes to a smoky room. He finds that the curtains in his bedroom caught fire from a candle on his nightstand. Judd is able to extinguish the curtains and, luckily, that was the only item destroyed by the fire. However, the smoke from the lined curtains was heavy. There is soot on his walls, carpeting and furniture and a lot of his clothes are ruined. The smoke damage from the fire should all be covered by his policy.
Example: Scenario two - Judd, whose home is insured under a DP 00 03 Special Form Dwelling Policy, enters his home and finds it filled with smoke. His windows were open while he was hosting a neighborhood barbecue and the wind blew most of the grill smoke into his bedroom. There is soot on his walls, carpeting and furniture and a lot of his clothes are ruined. The smoke damage from the barbecue grill is not eligible for coverage under his policy.
Lightning is electricity which is naturally generated from the atmosphere. Damage covered by the lightning peril may be the result of lightning itself or the result of a fire caused by the lightning. There is rarely a coverage problem when a direct strike occurs, since the resulting damage is usually both distinctive and substantial. The other common cause of lightning loss is the surge of electricity. Power surges are caused by lightning striking in the area; the usual location for such strikes is power company equipment. Appliances in a house can be damaged by an electrical surge. The cause must be established for coverage to apply since a surge from malfunctioning power company equipment, or a short circuit, does not qualify for coverage.
Internal explosion is covered under the Basic Form, DP 00 01 (and modified form DP 00 08). The protection responds to any explosion (unless specifically excluded) "occurring inside the described property or other structure containing insured personal property." The following loss events are specifically excluded:
· bursting of water pipes
· electrical arcing
· explosions of steam boilers or pipes owned, leased or operated by the insured
· rupture or bursting of pressure relief devices
If the extended coverage (EC) perils are added to the DP 00 01 by endorsement, the explosion peril contained in this group of perils replaces or modifies internal explosion. This permits coverage for explosions originating outside as well as inside the described premises.
The peril of windstorm involves damage caused by direct action of the wind, including high winds, cyclones, tornadoes and hurricanes.
Windstorm coverage primarily covers wind damage to the exterior of a dwelling, but will also cover the interior damage if it were a result of or preceded by the exterior damage as stated in the policy: "This peril does not include loss to the inside of a building or the property contained in the building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening."
Example: An insured leaves a window open and the wind blows over a lamp - this damage would not be covered.
Example: A severe wind bursts out a window, sweeps through the insured's house and a lamp is blown over and shatters - this damage would qualify for coverage.
Reasonably, wind must have attained sufficient velocity to have caused direct damage at more than one location to establish a "windstorm" loss. Another consideration is that leakage through an aging roof during heavy rain is not a basis for a windstorm claim. The windstorm peril does not cover loss to the following property when located outside of the insured building: awnings, signs, radio or television antennas or aerials including wiring, masts or towers, canoes and rowboats, lawns, plants, shrubs or trees.
Hail damage is just that: damage caused by the direct action of hail to insured property. As with windstorm, the hail or some other covered peril must cause damage to the outside of the insured dwelling allowing hail to enter the premises in order for interior hail damage to be covered. As a result, if a window were left open, allowing hail to enter a building, resulting damage would not be covered.
Similarly, the hail peril does not cover loss to the same specified property (awnings, boats, lawns, etc.) that is excluded by the windstorm peril when such property is located outside of the insured building.
As previously noted, if the extended coverage (EC) perils are added to the DP 00 01 by endorsement, the explosion peril contained in this group of perils replaces or modifies internal explosion. This permits coverage for damage to insured property caused by explosions outside as well as inside the described premises. The DP 00 01 (and by extension, the DP 00 08) clarifies that electric arcing, breakage of water pipes or breakage or operation of pressure relief valves are not considered within the extended peril explosion.
In the DP 00 02 and DP 00 03, the term "explosion" is neither defined nor qualified as an insured peril. Consequently, the scope of coverage associated with it is broad. There is general agreement that, in order for an occurrence to constitute an explosion, there must be a sudden breaking forth of a confined substance as a result of an internal force. Subject to this consensus, the courts and insurers, for the most part, conclude that the commonly understood meaning of the term should be governing.
Riot is defined by state statute, but usually refers to the assemblage of three or more people which results in the use of force or violence against individuals or property. Damage caused to the insured property due to riot is covered under this peril. Coverage includes direct loss caused by striking employees whether a riot occurs or not.
Civil commotion can be defined as an uprising or disturbance by a large number of people. As with riot, damage caused to the insured property due to such an uprising would be covered under this peril.
Bouvier's Law Dictionary summarizes five necessary elements of a riot: At least three persons must be involved; there must be a common purpose; there must be actual inception or execution of that purpose; there must be an attempt to help one another or to cooperate by force if necessary; there must be a display of force or violence in such manner as to alarm a person of reasonable courage.
There does not appear to be any distinction between riot and civil commotion. "Civil commotion" has been described in courtrooms as "an uprising among a mass of people which occasions a serious and prolonged disturbance and an infraction of civil order, not attaining the status of war or armed insurrection. It requires the wild or irregular action of many persons assembled together." Identifying the covered peril as "Riot or Civil Commotion" expands the scope of coverage in some states where occurrences might not be treated as covered if only the term "riot" were used.
The aircraft peril provides coverage from damage caused by aircraft, including self-propelled missiles and spacecraft.
Webster's New World Dictionary of the American Language defines "aircraft" as "any machine or machines for flying, whether heavier or lighter than air; airplane, dirigible, balloon, helicopter, etc."
This peril would apply to damage caused by the falling of an aircraft on a covered dwelling and its contents, as well as damage to such covered property caused by the falling of a part or object from an aircraft while the aircraft is in flight.
Damage caused by direct physical damage with "vehicles" is covered by the vehicles peril. Damage caused by objects thrown by vehicles (such as stones, etc.) is covered as well.
Example: Ophelia rents out a small, one-family home on the other side of town. The home is insured under a DP 00 02, Broad Form Dwelling Policy. One day she receives a frantic phone call from her current tenant. Ophelia leaves work and heads over to her property. She arrives in time to see a tow truck pull the front end of a Ford Bronco out of wall of the home's living room. A drunk driver missed the tight turn in the street in front of the home, smashed through a protective guardrail and then into Ophelia's rental property. Her insurance agent assures Ophelia that her policy covers the loss.
The vehicles peril does not include loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured or a resident of the described location.
The Dwelling Policy Program defines smoke as "sudden and accidental damage from smoke."
Any sudden and accidental damage from smoke caused from any source except smoke from agricultural smudging or industrial operations would be covered. The terminology used makes clear that the damage must occur over a short period of time. A prime source of claims is furnace malfunction that results in the backup and blowing of smoke and grit into rooms through a central heating system.
Agricultural smudging would include damage from burn-off of growing materials on or near the covered premises and use of smudge pots to protect growing crops and trees from frost. Damage from smoke associated with businesses would include that caused by the "blowing out" of smokestacks in the course of periodic cleaning. Excluded damage would also include damage caused by smoke from malfunctioning industrial heating and processing equipment.
As noted, all Dwelling Policy forms provide coverage for direct loss caused by smoke except smoke from agricultural smudging or industrial operations. The DP 00 01 also excludes loss caused by smoke from fireplaces.
Damage caused to insured property by the eruption of a volcano is covered under the Dwelling Policy Program; however, loss caused by earthquake, land shock waves or tremors is excluded.
This peril is designed to address the damage caused by the eruption of a volcano, including the ensuing lava flow and airborne particles.
In fact, under the Additional Coverage - Debris Removal, special mention is made of coverage for the removal of ash, dust or particles from a volcanic eruption that has caused direct loss to a building or property contained in the building.
Finally, one or more volcanic eruptions that occur within a 72-hour period are considered a single occurrence.
Vandalism and malicious mischief are two other perils which are not defined by the Dwelling Policy Program. Again, their meanings are derived from common law and court usage.
The word "vandalism" is currently used to identify a covered peril that includes "malicious mischief," there being little or no distinction between the two concepts in popular thinking. The two terms continue to be used in insurance practice, however, and it is helpful to know their respective meanings.
Vandalism and malicious mischief are generally cited as a single peril meaning willful or malicious physical injury to or destruction of property. Historically, malicious mischief has been added to vandalism to identify the covered peril because it has a special meaning by definition, and because it embraces a number of situations that are not technically covered by "vandalism."
"Vandalism" means willful destruction or
defacement of things of beauty. It implies general hostility to nice things and
satisfaction from their destruction. It is derived from the name of a Germanic
people who overran
"Malicious mischief" implies damage to property motivated by hatred or spite. It is not associated with beautiful things, but rather with utilitarian things such as machinery and business buildings and their contents. Acts leading to this kind of destruction are premeditated and include those arising from resentment and ill will during labor disputes.
Accidental damage is not covered under the "vandalism" peril. Coverage applies only when the damage is intentional. A showing of damage per se does not establish vandalism. The facts and the proof of loss must show that the damage claimed was deliberately and intentionally caused. "Intent" by the party perpetrating such acts is important. For an illustration, please refer to PF&M Section 469_C003, "Animal Damage Held Not Covered By Vandalism And Malicious Mischief Peril" in Court Cases.
The vandalism and malicious mischief peril does not include loss to property on the "residence premises" if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant. Furthermore, the vandalism or malicious mischief peril does not include loss by pilferage, theft, burglary or larceny.
Damage caused by burglars is covered under the DP 00 02; the actual insured property stolen by burglars is not covered by this peril.
For example, if two burly burglars attempted to remove a grand piano from the insured residence, the actual damage to the walls, floors and doorways caused by the piano being moved would be covered. The actual loss of the piano would not.
Furthermore, this peril does not include loss to property on the described location if the dwelling has been vacant for more than 30 consecutive days immediately before the loss.
This peril covers damage to the exterior of the insured premises and its contents if the falling object first damages the roof or exterior wall.
Damage caused by any falling object is covered, including falling trees; however, damage to the falling object itself is not covered.
This peril does not include loss to outdoor radio and television antennas and aerials including their lead-in wiring, masts and towers, outdoor equipment, awnings and fences.
Damage to the insured building and/or contents due to the weight of ice, snow or sleet is covered.
This coverage excludes loss to certain property, such as: awnings; fences; patios; swimming pools; foundations; retaining walls; bulkheads; piers; wharves; or docks.
Damage to insured property caused by accidental discharge or overflow of water or steam from within a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or household appliance is covered.
Coverage includes the cost of tearing out and replacing any part of the building on the residence premises necessary to repair the system or appliance from which the water or steam escaped.
Damage caused by continuous or repeated seepage or leakage to the insured property is not covered; the cause must be sudden and unforeseen. Damage caused by freezing is not covered under this peril (refer to the freezing peril).
In addition, loss to insured property by accidental discharge is not covered if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant.
Finally, the accidental discharge or overflow in question must originate on the insured's premises in order for coverage to apply.
Sudden and accidental tearing apart, cracking, burning or bulging of steam or hot water heating systems, air conditioning systems or fire protective sprinkler systems or appliances for heating water is covered.
The emphasis on this peril is that damage caused by the steam, hot water and related systems must be sudden and accidental as opposed to gradual and foreseen.
This peril does not include loss caused by or resulting from freezing except as provided in the peril of freezing.
Loss caused by the freezing of a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or of a household appliance (such as a clothes washer, water heater, refrigerator or dishwasher) is covered.
This peril does not include loss on the residence premises while the dwelling is vacant, unoccupied or being constructed unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drain the system and appliance of water.
This peril involves damage to insured property as a result of sudden and accidental artificially generated electrical current. Tubes, transistors and similar electrical components are not covered.