SPRINKLER SYSTEM WORK DID NOT VOID VACANCY EXCLUSION

Commercial Property

Vacancy Exclusion

Suder-Benore Co. LTD (Suder) owned a shopping center in Toledo, Ohio known as Suder Square. A Family Dollar Store occupied about 7,800 square feet of the approximately 48,000 square foot building. but the remaining 40,200 square feet was vacant. Suder had turned off its sprinkler system because of the expense to heat the vacated space. The Toledo fire inspector conducted a regular inspection and required that the sprinkler system be reactivated or Family Dollar had to leave.

The sprinkler system was repaired and replaced starting on January 13 and the crew, during the installation, noticed that a break-in had occurred in the vacant portion of the building around February 8. The thieves stole copper piping and vandalized the security system and a radio unit so. Suder filed a police report and submitted a claim to Motorists Mutual Insurance Co. (Motorists).

Motorists denied the claim because of its policy’s vacancy exclusion that denied coverage for vandalism or theft if more than 31% of the building had been vacant for 60 or more days before the loss.

Suder filed a declaratory judgment action against Motorists arguing that the vacancy exclusion did not apply because the policy vacancy exception for buildings under construction or renovation. Suder argued that repairing and re-activating the sprinkler system qualified as renovations such that it was entitled to coverage.

The trial court agreed with Suder and court awarded damages of $123,316, $2,400 for the vandalized security system, and $120,916 to replace the copper pipe that was stolen. Motorists appealed.

The appellate court held that the trial court erred in determining that Suder’s unoccupied building was under renovation for the purpose of voiding the vacancy exclusion. It rules that the repair of the sprinkler system was maintenance only and did not take place as a part of a renovation or construction project.

Court of Appeals of Ohio, Sixth District, Lucas County. Suder-Benore Co., LTD., Appellee, v. Motorists Mutual Insurance Co., Appellant. No. L-12-1351. No. L-12-1351 Sept. 13, 2013. 2013 WL 5211421 (Ohio App. 6 Dist.)