A Case Study In: The operation of a ‘floating’ sum insured in a nearby annexe
The Insured was in the business of producing and supplying office stationery. There was a significant fire in its paper store and a claim was made under the commercial combined policy.
The policy covered four locations within a 20 mile radius of the main property. However, the location of the discrete paper store had never been specified on the policy and so liability for the claim was rejected by the insurer.
We investigated the matter and had to agree that the separate address had never been included. However, we viewed the separate address as being something of a technicality because, operationally, it operated as an informal wing to the main property. Having made further enquiries, it was established that access to the store could only be made via the main front door. We also identified that the contents sum insured was ‘floating’ over all four listed locations and that the sum insured was adequate to cover the entire stock.
We then examined the policy wording and noticed that:
The policy described Contents as:
Machinery, plant and all other contents belonging to the
Insured or held by the Insured in trust and for which the
Insured are responsible (other than landlord’s fixtures and
fittings, stock and other property specifically described in
the Schedule) whilst in or on the Buildings
The policy described Buildings as:
The buildings shown in the Schedule including:
– landlord’s fixtures and fittings, fixed glass and fixed
sanitary ware in or on or pertaining to the buildings
– walls, gates and fences and
and so far as they are not otherwise insured
– small outside buildings (including steel containers and
portacabins), annexes, gangways, conveniences and
– extensions communicating with the buildings
(the emphasis is ours)
We explained to the insurer that it had not been deprived of any premium because the floating contents sum insured was adequate to cover all locations. This fact, coupled with the specific inclusion of annexes in the policy’s description of Buildings, allowed us to negotiate a full settlement of the claim.