Advertise Here
Icon

Directory

IconAccounting & Tax
IconActuaries
IconAdministrators
IconAppraisers & Valuers
IconArbitration Services
IconASIB
IconAssessors & Loss Adjusters
IconAssist and Lifestyle Benefits
IconAssociations & Institutes
IconAuditors
IconBBBEE Consulting and Verification Agencies
IconBroker Acquisition Financing
IconBrokers for Brokers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconCall Centre Outsourcing & Sales
IconCompany Secretarial Services
IconCompliance
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDebit Order Collection Facilities
IconDefensive Driver Training
IconEducation and Training
IconEmergency Medical Rescue
IconFAIS
IconFire, Storm, Flood Damage Specialists
IconForensic Investigation Services
IconHuman Resources
IconIndustrial Cleaners
IconInformation Technology and Software Partners
IconInsurance Companies
IconLegal
IconLightning Damage & Surge Protection Specialists
IconNiche Insurance Products
IconOmbud
IconOutbound Sales
IconOutsourcing Companies
IconPolicy Administration
IconPremium Financing
IconPublic Loss Adjustors
IconPublications
IconRating Agencies
IconReference Books & Material
IconRegulatory Authorities
IconRisk Finance
IconRisk Management
IconRisk Surveyors
IconSalvage Operators
IconSpecialized Claims Investigations & Assessing
IconSurveys and Research
IconTraining Courses & Workshops
IconUnderwriting Managers
IconVehicle Accident Management
IconVehicle and Household Risk Inspection Services
IconVehicle Tracking
IconWellness Programs
IconWholesale Brokers
IconZZZZZZ
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 »

Enabling brokers with tech platform for new IoT-based insurance

Insurance software provider Genasys Technologies was selected as the technology platform provider for SafeHomes, a new technology-driven homeowners insurance solution. SafeHomes, by GENRIC Insurance, ...
Read More »

  

Broker Portal, Coface’s new digital interface for its brokers

Coface launches its new portal for brokers, offering a new experience to its partners in the development of their business around the world. Available in 42 of the countries covered by the Coface group, ...
Read More »

  

When does a claim under a liability policy prescribe?

A claim for indemnification under a liability insurance contract only arises when liability to a third party for a certain amount has been established. For purposes of prescription, the debt becomes due when the ...
Read More »

  

SAIA Encourages Property and Household Contents Owners to Take Precautions During Load Shedding

The South African Insurance Association (SAIA) urges all property and household contents owners to exercise all precautions in an effort to mitigate the risks associated with load shedding and power cuts. The recent ...
Read More »

 

More News »

Image

Healthcare »

Image

Investment »

Image

Life »

Image

Retirement »

Advertise Here
Image
Image
Image
Image
Image
Image
Image
Advertise Here

From The Glossary »

Icon

Extended Insurance:

A form of temporary life insurance available as a non- (extended-term insurance) forfeiture option. It provides for continuing the face amount of the policy (subject to certain adjustments) as term insurance for whatever period.
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 - 2020. All Rights Reserved.