Property and Third Party Liability

Property Damage Policies

Business owners can purchase insurance for property damage to real and personal property.  These policies usually have a list of perils insured against as well as perils that are excluded.  Policies offered by different insurance carriers can contain different coverage and exclusion language.


 

Fire Insurance Policy

Fire insurance policy language is regulated by statute, N.J.S.A. 17: 36-5.20. An important provision of the statute is the “one year suit clause.” This provision requires that a lawsuit be instituted within one year from the inception of the loss. The law provides for certain tolling of the statute between the time of notice to the insurance company and the denial of coverage.


 

Homeowner Insurance Policy

Homeowners’ policies insure the real property, home, structures for property damage from  insured perils such as fire, storm damage, vandalism etc..  These policies have exclusions from coverage which are many times fact sensitive to how the damage occurred.  For instance, water damage may be covered if caused by a storm but may not be covered if ground water.  The policy coverage language and exclusions must be analyzed in detail.  Sometimes, the initial cause of the loss may not be covered but this loss may have set into motion other losses which are covered.

Homeowners’ policies provide coverage for actual cash value or replacement cost.  Replacement cost is the better coverage and may be added to the policies by special endorsement or rider.  Personal property within the home may be covered if damaged by an insured peril.  Examples would be furniture, flooring, sound equipment etc..  Some personal property needs to be specifically covered such as jewelry and art work.  Riders or endorsements can be obtained for these types of personalty.

Homeowners’ policies also provide liability coverage for members of the household.  This coverage is for negligence claims by third parties against members of the household.  Intentional acts are generally excluded.  Personal injuries to third persons as a result of a defect in property, an injury to third persons caused by a negligent act on the premises are the types of claims that would be covered under the liability section of the policy.  Homeowners’ policies also cover situations in which the household member’s negligent act causes injury to third parties when away from the household such as when out socially or traveling.  Automobile negligence is typically excluded.

Most policies have a specific exclusion for assault and battery claims.  The applicability of this exclusion often depends on whether the insured intended to cause the injury and not whether the act was intentional.  The law imposes a presumption of intent for certain reprehensible conduct.

Additional coverage for liability may be obtained by purchasing an “umbrella”.  An umbrella policy increases the limits of liability to one to five or more million dollars.  Although the homeowners’ policies exclude coverage for automobile accidents, the umbrella policies generally provide coverage if certain limits of automobile coverage is in place.


 

Tenants Insurance

These policies provide coverage for personal property and liability to residential tenants.  Personalty such as furniture, computers, media devices are covered.  Usually, the coverage is similar to that provided by a homeowners’ policy to real property owners.  The liability coverage is also similar.

As to the liability coverage, tenants can be sued by landlords in addition to third parties for the tenants’ negligence.  By way of example, suppose the tenant causes the bathtub to overflow and cause damage to the landlord’s building and personalty.   A tenants’ policy would provide coverage for the landlord claim.

If a third party is hurt in the rental premises as a result of negligence of the tenant, a tenants’ policy would cover the tenant.  Landlords’ policies do not provide coverage for tenants’ negligence.

Like the homeowners’ policies, tenants may purchase umbrella policies to protect against excess liability.