The common meaning of the term “
breaking into,” the court reasoned, was gaining
entry into the building, not knocking holes
in walls once inside. To support this reasoning, the court further explained that the exception notes both breaking in and exiting,
making it even more apparent that entry
and exit from actual buildings was intended.
The trial court thus was overturned.
Another frequent situation involves a
coverage sublimit for theft. The 2012 case
of SA-OMAX 2007, L.P., v. Certain Under-
writers at Lloyd’s, London, involved a policy
providing over $1.2 million in coverage for
the building with a theft sublimit of $25,000.
Thieves went onto the roof of the building
and stole copper pipes and wiring from five
HVAC units. In doing so the thieves cut
holes in the roof and further damaged it
by dragging the copper coils across it. The
interior of the building subsequently was
damaged when rain entered through the
holes in the roof. In all there was $80,000 of
building damage and theft loss.
SA-OMAX argued that the $25,000
sublimit applied only to the value of the
items stolen. The company reasoned
that the building damage would not fall
within the sublimit because the thieves
did not “steal” the roof, only the copper.
It argued that the form writers could have
stated that the sublimit applied to theft
and any damage caused by or resulting
from theft, and they had not.
Conversely, the insurer reasoned that
the policy covered loss or damage to covered property caused by or resulting from
a covered cause of loss. In its words, the
covered property was the building, and the
cause of loss, theft. The policy then stated,
through the sublimit, that the cause of loss
for theft was limited to $25,000. The court
agreed with the insurer’s argument and
ruled in favor of Lloyds of London.
In general, the FC&S® Online editors
agree with the reasoning of these two
courts. Not everyone does, however. An
example of the alternative view is seen
in Nautilus Insurance Company v. Steinberg, also a Texas appeals court case. The
details of this claim are very similar to
those in SA-OMAX. A thief climbed onto
the roof of a building, opened the air
conditioning units, and removed copper
pipes and wiring. While the perpetrator
was still on the roof the policy arrested
him. He was convicted of felony criminal
mischief. Nautilus denied the claim for
damage based on the theft exclusion.
In deciding on this appeal, the court took
an interesting twist. In order for a theft to
occur and the theft exclusion to apply, the
court said, the insurance company had to
show that the perpetrator intended to deprive the building owner of the property.
The trial court had not addressed this question, and the perpetrator had not actually
stolen the materials since he was arrested
prior to taking the property. The decision
turned on this issue, and the appeals court
said that theft could not be inferred and,
therefore, Nautilus owed for the damage.
Once again, a point that most would
not even contemplate became the crux of
a coverage issue. K
Diana Reitz, CPCU, is editorial director of
the reference division at The National Underwriter Company, which includes FC&S
Online and Claims. She may be reached
10/26/12 3:48 PM