NEWLY ACQUIRED PROPERTY HELD NOT COVERED AFTER THE AUTOMATIC 90-DAY PROTECTION EXPIRED

NEWLY ACQUIRED PROPERTY HELD NOT COVERED AFTER THE AUTOMATIC 90-DAY PROTECTION EXPIRED 131_C058

NEWLY ACQUIRED PROPERTY HELD NOT COVERED AFTER THE AUTOMATIC 90-DAY PROTECTION EXPIRED

The insured property-owners were partners who purchased and operated several multiple-unit apartment complexes, which they had protected with a commercial property policy. The insured purchased an additional apartment complex and almost one month after purchase; the insured asked the broker on the policy to add coverage for the new complex. The request also asked for the coverage to be backdated to the date of purchase. Almost two months later, but still barely within the 90-day newly acquired property clause, the agent requested the complex to be added to the policy.

The insurer responded by stating that coverage would not be backdated as additional information was needed and until received, a quotation would not be provided and if quoted, would be based upon its own merits and the existing rate would not be used, further, coverage would be subject to an inspection.

The broker responded by providing partial information and requesting confirmation of coverage. The insurer repeated its original response and requested the remainder of the information. The broker never responded, nor did the insurer bill for coverage.

About five months later a fire occurred to the apartment complex, seriously damaging it. The insured filed a claim with the property insurer who in turn, denied coverage. The insured then filed a suit against the insurer and the broker alleging breach of contract, negligence, and breach of fiduciary duty, among other things. The broker also filed a cross-suit against the insurer.

The trial court ruled in favor of the insurer on both the original suit and the cross-suit. The trial court ruled that the 90-day property coverage extension had expired almost four months prior to the loss and the insurer had never affirmed permanent coverage.

Upon appeal, the decision of the lower court was affirmed in favor of the insurer.

(S. Kornreich & Sons, Incorporated et al., Cross-Plaintiffs/Appellants v. Genesis Insurance Company, Cross-Defendant/Respondant. Superior Court of Loss Angeles County, CalCtApp. No. B089803. July 15, 1997. CCH 1997 Fire and Casualty Cases, Paragraph 6216.)