A ‘schedule of location’ lists property locations where insured assets are located. A homeowner’s policy will list the house, possibly an additional structure. A business policy, when drafted properly, will list all locations insured under the policy where a business loss can occur. Failing to include all such locations can result in denial of what would otherwise be a covered loss.
The Sixth Circuit Court of Appeals recently upheld an Ohio federal trial court ruling which dismissed a policyholder’s action for breach of contract and bad faith against its insurance company.1 Berrylane Trading Inc. is a cellphone distributor based in Ohio. In December, a thief broke into Barrylane’s Florida warehouse and stole approximately $1.7 million worth of iPhones. Unfortunately for Barrylane, the Florida warehouse was not listed on the schedule of locations covered by the property insurance policy, and the case was dismissed.
Berrylane purchased a policy of insurance from Transportation Insurance Company which listed Berrylane’s Bedford, Ohio, headquarters as Berrylane’s only insured location. Berrylane also purchased an endorsement extending coverage to any property that the company “newly acquired” during the policy period: April 2015-April 2016. Berrylane argued the extra coverage should apply as Berrylane did not begin using the warehouse until summer of 2015, after the policy inception date, however the court held that the lease for the warehouse, signed several months before, fit within the definition of ‘acquire’ and determined therefore the warehouse was not property newly acquired during the policy period.
To help protect yourself, review the schedule of locations—part of the declaration page—and make sure any newly acquired locations have been added to the master policy. It’s also a good idea to ascertain that building values and business interruption exposure is updated and current. You do not have to wait for your yearly renewal to make changes to the policy or add new acquired property locations.
1 Berrylane Trading Inc. v. Transportation Ins. Co., No. 18-3144 (6th Cir. Nov. 2, 2018).