Personal Injury Additional Coverages

There is a single additional coverage under the ISO personal injury endorsement—for loss assessments up to $1,000 each assessment for the insured’s share of loss assessments made as the result of covered personal injury. This provision is substantially similar to the bodily injury and property and additional damage for loss assessments. BODILY INJURY Bodily injury means bodily harm, sickness, or disease, including required care, loss of services, and death that results. There really are not any hidden concepts here. Everyone can readily appreciate that if someone is hurt as the result of an accident for which you may be held liable, that person’s damages include many things, such as: ◆ his or her medical and hospital bills; ◆ past and future wage loss or earning capacity; ◆ costs of ongoing care; and, ◆ damages for his or her inability to enjoy the activities enjoyed prior to the injury. Liability Coverages 103 What can be an issue is whether mental or emotional distress constitutes bodily injury in the absence of physical injury. A growing trend in the law is the view that emotional distress that is the product of noncovered conduct does not constitute bodily injury within the meaning of standard liability policy definitions of bodily injury. For example, emotional distress that is the product of economic loss, such as the loss in value of an investment or savings, does not constitute bodily injury under this view. PROPERTY DAMAGE The standard ISO HO 3 homeowners policy contains the following definition of property damage. Property damage means physical injury to, destruction of, or loss of use of tangible property. The concept of physical injury to tangible property is central to an understanding of the property damage coverage of liability policies. This physical injury to tangible property requirement has the effect of excluding coverage for damages claims based on injury to nontangible property interests. Even the loss of use portion of the property damage definition is tied to tangible property. Tangible property means property having physical substance, apparent to the senses. Examples of intangible property are things such as easements, leasehold interests, licenses, patents, copyrights, lost profits, loss of goodwill, loss of the expected benefit of a bargain, and loss of value of an investment. Diminution in value of an investment constitutes economic loss, not property damage. However, diminution in value of tangible property as the result of physical injury can be used as a measure of damages resulting from physical injury to tangible property. EXAMPLE: Let’s say an adjoining landowner has an easement across your property for access to the street or highway. You build a fence across your property, including across the easement, that prevents access. 104 The Complete Book of Insurance The adjoining landowner sues you. His lawsuit would not constitute a covered property damage claim. Your interference with his easement is interference with intangible property rights. The physical injury element is also missing. Another example of a noncovered economic loss claim would be a suit against you arising out of your sale to another person of a car or motorcycle that breaks down and requires expensive repairs shortly after the sale. There is no property damage here. Rather, the essence of the claim is an economic loss—loss of the buyer’s expected benefit of the bargain. The buyer paid a certain amount for the car or motorcycle on the expectation that it was in good working order, when, had its true condition been known, the fair purchase price would have been much less. Similar comments would apply to a suit against you by a buyer of a house for alleged nondisclosure or concealment of defects in or damage to the house, such as nonpermitted alterations or remodeling. What about loss of use property damage claims? An example of a covered loss of use claim is as follows. Your residence is situated upslope from one of your neighbors. The hillside, on your property, becomes unstable, causing the local authorities to order your neighbor and his family out of their home until the hillside can be stabilized. Your neighbor has lost use of tangible property, his house and premises, during the period required to stabilize the hillside. He would have a loss of use property damage claim against you. Some homeowners policies’ property damage definitions only extend loss of use coverage to tangible property that has been physically injured. Thus, assuming the same facts as the preceeding example, under a policy whose property damage definition only extends to loss of use of tangible property that has been physically injured, your neighbor’s suit against you would not constitute a covered property damage lawsuit.

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