Property Policy Covers Equipment in Temporary Storage Facility

Property Policy Covers Equipment in Temporary Storage Facility

By Jill Berkeley, Partner, Neal, Gerber & Eisenberg LLP

In Amera-Seiki Corporation v. Cincinnati Insurance Company, No. 12-2739 (07/23/2013), [enhanced version available to subscribers], the Eighth Circuit put Cincinnati Insurance Company to the test of explaining why coverage for business personal property “that you newly acquire at any location you acquire” did not include equipment temporarily stored at the Port of Los Angeles.

It’s a decision that policyholder coverage lawyers love because the court looked at the definitions of the word, “acquire,” and found that Cincinnati was unable to demonstrate that the word acquire was susceptible only to the more limited interpretation Cincinnati suggested. Cincinnati’s approach is what you see over-and-over-again when insurers take the narrowest view possible of a word when it suits them and argue that theirs is the only reasonable interpretation. In this case, the policyholder argued that if the insurer intended to require greater permanency, ownership, possession, or control than the “lease of storage space” at the terminal, it should have defined the term or otherwise expressly limited it in the same way it had limited other policy provisions.

Amera-Seiki pointed to the fact that the exception to the extension for locations “other than at fairs, trade shows or exhibitions,” showed that there was no substantive distinction between the degree of possessory interest, dominion, or control with regard to the temporary acquisition of a location at a ‘fair, trade show, or exhibition,’ and its temporary acquisition of the location at the terminal. Common characteristics of fairs, trade shows and exhibitions, including lack of ownership and the absence of any exclusive right to direct, command, regulate, manage, or control the facility as a whole, “clearly demonstrated the terminal fell within the meaning of “’location you acquire’.” Hoist on their own petard, I’d say.

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