HOTEL PROPERTY DAMAGE HELD COVERED ONLY OUTSIDE ROOM OCCUPIED BY INSURED

HOTEL PROPERTY DAMAGE HELD COVERED ONLY OUTSIDE ROOM OCCUPIED BY INSURED 270_C038

HOTEL PROPERTY DAMAGE HELD COVERED ONLY OUTSIDE ROOM OCCUPIED BY INSURED

The sales vice president of a food products company returned to his hotel room for a break during the course of a business seminar and, while there, did some preliminary packing to expedite his later checking out. While raising his garment bag, he accidentally hit a sprinkler head on the wall. The activation of the sprinkler system caused considerable damage to the room and elsewhere in the hotel.

Legal action followed denial of coverage, by the food company's general liability insurer, for damage claims presented by the hotel. A trial court declared that the insurer was obligated to provide coverage. The judgment was appealed by the insurer.

It was noted that, by virtue of the insuring agreement and definitions, protection was extended to the named insured (food company) and employees acting within the scope of their duties. The insurer argued that the trial court did not apply two pertinent exclusions. The first provided that the insurance did not apply to "property you own, rent or occupy." The second excluded coverage for damage to "personal property in the care, custody or control of the insured."

The appeal court concluded that both exclusions were pertinent to the claims against the named insured and its sales executive. It determined that the damage to the room and its furnishings was not covered. However, the food company rented and its employee occupied the room only, not other portions of the hotel. And personal property outside the room but in the building was not "in the care, custody or control of the insured."

Accordingly, the order of the trial court was affirmed but modified to provide that the insurer had a duty to defend and indemnify only as to damage in portions of the hotel not in the care, custody or control of the named insured's employee.

Editor's Note: Please refer to the homeowners insurance case bearing a citation beginning "United Food Service...." for particulars of the nonapplication of the room occupant's homeowners policy to the property damage sustained.

(UNITED FOOD SERVICE INC. ET AL., Respondents v. FIDELITY & CASUALTY CO. OF NEW YORK, Appellant; WORCESTER INS. CO., Respondent. NY Supreme Court, Appellate Division, Third Judicial Department. No. 66065. March 11, 1993. CCH 1993 Fire and Casualty Cases, Paragraph 4213.)