Image
Icon

Directory

IconAppraisers and Valuers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDefensive Driver Training
IconEmergency Medical Rescue
IconForensic Investigation Services
IconInsurance Brokers - Alphabetical Listing
IconInsurance Brokers by Type of Product or Service Needed
IconInsurance Companies
IconInsurance Consultants
IconLightning Damage & Surge Protection Specialists
IconOmbud
IconOnline Quotes and Cover
IconPremium Financing
IconPublic Loss Adjustors
IconPublications
IconRating Agencies
IconRegulatory Authorities
IconRisk Finance
IconRisk Management
IconRisk Surveyors
IconSalvage Operators
IconTelephone Quotes
IconVehicle Accident Management
IconVehicle and Household Risk Inspection Services
IconVehicle Tracking
IconWellness Programs
Image
  Subscribe To »

Damage arising from marijuana operations not covered by policy (US)

Published

2018

Mon

03

Sep

 

 

 

Sandra Sithole, Director
Norton Rose Fulbright South Africa Inc.
 

 

 

A US appeals court in August 2018 found that an insurer does not have to indemnify its insured for damage to a warehouse by tenants who converted it into a marijuana growing operation, finding that an exclusion in the policy for losses resulting from criminal acts precluded cover.

The claim arose under the building and personal property coverage section of a standard first-party commercial insurance contract in which the insurer agreed to pay for ‘direct physical loss of or damage to General Property… caused by or resulting from any covered Cause of Loss’.

The policy contained an exclusion that the insurer ‘will not pay for loss or damage caused by or resulting from’ any ‘dishonest or criminal act by you …or anyone to whom you entrust the property for any purpose’. 

The insured, a commercial landlord, leased several units of property to a group of commercial tenants for general office or light industrial business. During 2015, the US Drug Enforcement Agency raided the premises and caught the tenants growing lots of marijuana. The insured immediately evicted the tenants but to accommodate their ‘business’ the tenants had removed walls, cut holes in the roof, altered ductwork and severely damaged the HVAC systems, the repair costs of which were significant.

The insured argued that this was clearly an act of vandalism which was covered by the policy.

The court found that while the insuring clause covered the loss, the ‘criminal acts’ exclusion negated coverage.

The court also rejected the insured’s contention that because no convictions were made, the exclusion for criminal acts can apply only if the wrongdoing results in a conviction. The court said that the insurer’s policy referred to ‘criminal acts’ not ‘crime’ or a ‘criminal conviction’. Requiring a conviction would be too onerous on the insurer in circumstances where the policy imposed no such requirement.

The case is KVG Properties Inc. v Westfield Insurance Co.  

 
Source: Norton Rose Fulbright South Africa Inc.
 
« Back to previous page Print this page » |
 

Breaking News »

Get your home ready for Winter

Winter is an opportune time to undertake the vital maintenance and repairs necessary to ensure your safety at home. “These tips will help you manage the challenges that come with winter and colder temperatures,” ...
Read More »

  

Nobuhle Nkosi appointed AGCS Africa Head of Liability and Financial Lines

...
Read More »

  

Morocco: payment delays are improving but remain too long

Coface's fourth survey on payment terms in Morocco shows a situation that remains worrying despite a slight improvement. Coface presents its fourth survey on the payment behavior of companies in Morocco ...
Read More »

  

Natural gas: an oscillation between boom and gloom

The natural gas market is booming and will increase in the medium term, but many factors point to a less promising future. Until recently, natural gas was acclaimed as the "cleanest" of fossil ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Life »

Image

Retirement »

Image

Have Your Say »

Is insurance a priority for South African millennial's


|Results »
Image
Image
Image
Image
Image
Advertise Here

From The Glossary »

Icon

Rand-cost Averaging:

Method of buying shares or unit trust units by investing the same amount of money regularly, regardless of the market price. Rand-cost averaging helps investors to avoid timing the market, as a Rand buys more units when the price is down and fewer when the price is up.
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2019. All Rights Reserved.