One of our files involve a denial of coverage on a CGL commerical policy. All-Risk(replacement cost endorsement).
Carrier claims that event that causes loss is deemed <<Pollution>> and policy has a conditional (but not if......) pollution exemption clause.
Source of damage-- neighbouring business tenancy, malicious, negligent conduct in its business operations. Other tenant has same landlord as victim.
Carriers independent adjuster did not submit a denial recommendation, however upon his submission, carrier terminated independent adjuster on file, and without furth furrther investigation, refused to honour claim.
I'm a little confused. You say that this is a CGL policy, by which I assume you mean a commercial general liability policy, but it sounds like you're describing a first-party property loss. Can you clarify exactly what the claim is for? Also, is the policy form one of the standard forms that ISO provides to insurers in the U.S.? I'm not familiar with Canadian forms, but if the form is equivalent to one used in the States, I can try to offer my take on it.
yes, that is the type of policy being carried, called:
Commercial Building, Equipment and Stock Broad Form
and the policy includes a Relacement Cost endorsement on the manufacturing companies equipment and assets, but no coverage for business interruption.
The first party loss(the companies insurer) denied coverage, based on a Pollution exclusion that is written into the policy, but the paragraph seems to clearly say the opposite of what their position is currently, in that the exclusion does not apply if Named Perils are the cause, and in this case....we chose - Malice and Negligence.
The other business, whose conduct caused the problem has their own insurer.
They are also refusing to look at the claim, as their clients are denying that they did anything wrong.
Some details of the claim:
-injured company(us) rented industrial space from landlord X.
-in same warehouse, after we moved in, landlord X rented part of the neighbouring demising space to the damaging tenant .
Separation in the building between the two tenants was a 12 foot high chain link fence(same as around a playground). Above the fence was another 15 feet of open air. Warehouse is like a 1970's military aircraft hangar.
When the damaging tenant first moved into the space, their type of business did not create any airborne contamination. Several years after, they changed their scope of business, and became a cabinet making shop(wood working).
At that time, also,an outside mounted Dust Collector(Extractor) was installed and connected to their equipment, which extracted the wooddust from the building.
Several years later, the summer of 2001, they proceeded to move their facility from my clients building.
Of course, first thing they did, is move the Dust Extractor to their new location.
However, for about 4 months after removing it, they continued to operate in my clients building, without the use of the Dust Extractor, and contaminated our equipment, thus crashing it, contaminating moving surfaces, where economics speak to replacement rather than refurbish.
landlord X was informed of the problem many times throughout the 4 months, beginning, as the wooddust began to eminate onto and into our equipment and production, but landlord X didn't do anything about it except to advise us that the damaging tenant was in the process of moving, and they could do no more.
We recently found out that the damaging tenant did not have proper municipal inspections to carry on with such a business in the first place, however seemed to get away with it, until we finally looked into the issues, once our equipment broke.
By the way, Plastics Injection Molding is what we carry out.
The owner of the damaging tenant business is a local fireman.
The landlord is a multimillion dollar enterprise.
Also, a note, landlord X gave us a letter, prior to the damaging tenant moving into our building, confirming that
"the landlord recognizes that we can have no airborne dust in our demised space, and as such, will not allow dust to eminate from any new tenancy that they place next to us"
Even with all of that, we are stuck in the mud.
Oh yes, our insurers independent adjuster advised me, after the word came down that the file was denied,.....
that he had recommended payment but couldn't do any more, and the insurer has since removed the file from him, and taken it inhouse.
I trust this gives a clearer picture of what this story contains.
Any suggestions, what to do, who to call...where to call...for some help.
We feel that we are being flattened by big pockets...and that is bad for the industry....me thinks.
As a former claims adjuster I would recommend the following:
1. Have your insured file a claim against the other party's carrier if he has not already done so.
2. Have your insured file a complaint with your state Department Of Insurance.
My role in this file...is that I work for the company that got damaged.
I have been blessed with the challenge of digging up avenues of process to motiviate the insurers to at least discuss their positions, as they seem to all of our professionals, to be quite academic... and we wish to try to solve this, with other than litigation, if available. Our lawyer indicates many thousands of dollars....to pursue such a task...and with broken equipment..it's difficult to maintain the cash flow to pay for that...of course, if there is no other course of action available, we shall sue them, for sure.
The obvious process(discussion) is being stalled by both the 1st party insurer and the insurer for the damaging tenant, ...the landlord is healed enough..they don't have an insurer representing them.(yet)
In Canada, we have various government legislations that help control, out of control insurers, however, they seem to have no power, when there is issue with a claim.
They seem to only deal with premiums, and broker/underwriter relationships, and formalities in the "proof of loss" document, and time lines for their reply. But no police powers as to what they decide, or how they decide it.
Basically, if it is Thursday, and raining, and they don't feel like paying...they'll decline, and there seems to be no one available to make them listen, except a lawyer, of course.
In this story, the wording of the 1st party claim is written in semi-simple english.
I could quote the paragraph from our policy on a subsequent posting...if you want to see what the issue regarding the 1st party claim wraps around...
We've had 2 lawyers, 2 independent insurance adjusters, several other professionals, and coincidentally, the adjuster for the damaging tenant, who all have said to us, that they don't understand why the policy isn't being honored, based on the damage/circumstances, that all of these people are first handly aware of.
And regarding the landlord and damaging tenant, we are taking litigation steps..
however, it is too bad that on every policy, especially large dollar policies...there is a disclosure from the insurer that sez...
DEAR CUSTOMER - PLEASE BE AWARE THAT YOU PROBABLY WILL HAVE TO SUE US TO FORCE US TO HONOR A CLAIM ON THIS POLICY, EVEN WHEN OUR OWN ADJUSTER RECOMMENDS PAYMENT.
Of course, my goal in trying to find some help from you folks, was to perhaps come up with some avenue of process, that we hadn't thought of, other than litigation.
Creating pressure to be reasonable, to a multibillion dollar insurer is difficult to do....and we are certainly discovering that.
1. your insurance company for denial of your first party claim (assuming your interpretation of the policy is correct and that polution caused by malice and negligence of the neighboring business is covered)
2. the neighboring tenant for causing or not preventing the pollution that damaged the equipment of your business and caused loss of income. (Their liability policy may be covering this claim.)
3. your landlord, for breach of contract (for not preventing polution from neighboring tenant's business)
Does the Canadian legal system allow lawsuits on contingency basis, i.e. you only pay legal fees if you win? If yes, I can probably refer you to a U.S. law firm with Canadian office or correspondent that may take the case on contingency.
If you wish to discuss this matter, call me at 215 736 9970.
furrther investigation, refused to honour claim.