Question from an IIABNY member: If a landlord of an apartment building is providing appliances to the apartment units, must the landlord have a separate personal property limit under their commercial real estate policy or this can be included under the building/property coverage? Same question goes for a condominium where the sponsor provided the appliances. Self-understood, we are talking about an All Risk policy form in New York.
Answer: It depends on the provisions in your client’s policy, but this is what the ISO Building and Personal Property Coverage Form says:
“1. Covered Property
Covered Property, as used in this Coverage Part, means the type of property described in this section, A.1., and limited in A.2., Property Not Covered, if a Limit Of Insurance is shown in the Declarations for that type of property.
a. Building, meaning the building or structure described in the Declarations, including: …
(4) Personal property owned by you that is used to maintain or service the building or structure or its premises, including: …
(d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering; …”
Therefore, the appliances can be covered as part of the building under the B&PP Coverage Form. The value of these appliances must be added to the building’s value in order to avoid underinsurance.
The ISO Condominium Association Coverage Form contains a pretty significant difference:
“1. Covered Property
Covered Property, as used in this Coverage Part, means the type of property described in this section, A.1., and limited in A.2., Property Not Covered, if a Limit Of Insurance is shown in the Declarations for that type of property.
a. Building, meaning the building or structure described in the Declarations, including: …
(4) Personal property owned by you that is used to maintain or service the building or structure or its premises, including: …
(d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering that are not contained within individual units; …”
The building owner’s appliances are building property only if they are not contained in individual units. If the building owner is supplying appliances in the units, they must be insured as personal property, requiring a separate limit.
Your client’s policies may not be identical to the ISO forms, so it’s a good idea to check the provisions in them.
I received this email from Jerry Trupin, CPCU, CLU, ChFC in Sleepy Hollow, New York:
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ISO CP 00 17 includes the following in the definition of covered building property:
6) Any of the following types of property contained within a unit, regardless of ownership, if your Condominium Association Agreement requires you to insure it:
(a) Fixtures, improvements and alterations that are a part of the building or structure; and
(b) Appliances, such as those used for refrigerating, ventilating, cooking, dishwashing, laundering, security or housekeeping.
But Building does not include personal property owned by, used by or in the care, custody or control of a unit-owner except for personal property listed in Paragraph A.1.a.(6) above.
The key term is “if your condominium Association Agreement requires you to insure it:” If so, I think the property described in A.1.a.(6) would be covered whether owned by the developer or anyone else. Sometimes called “original specifications” coverage, it's my preferred choice for condo insurance. Even if the agreement doesn't call for original specifications coverage, some insurers will endorse the policy to provide equivalent coverage.
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Very true. Some of the coverage in both personal and commercial condominium forms hinges on what the condo association by-laws say. Thanks to Jerry for raising this point!
Posted by: Tim Dodge | May 25, 2016 at 03:08 PM