When Lamar Advertising Company suffered damage from Hurricanes Ike and Gustav, it did what any business would do and filed a claim with its insurance company, Liberty Mutual. A significant part of Lamar’s claimed damages were to outdoor advertising signs, or billboards, that were scattered throughout the country. While Liberty Mutual admitted that losses from Hurricanes Ike and Gustav were covered under the policy, Liberty Mutual denied Lamar’s claim for billboard damage on the basis that the billboards were located at “unscheduled locations” that had not been properly reported to the insurance company. Just this month a federal court in Louisiana agreed with Liberty Mutual in Lamar Adver. Co. v. Liberty Mut. Fire Ins. Co., No. 10-620, 2011 WL 2648483 (M.D. La. July 6, 2011).

The pivotal policy provision was this:

Unscheduled locations means:

1. Real property reported to us, but not shown in the Schedule, which you owned or occupied before the effective date; and

2. Locations reported to us, but not shown on the Schedule, at which you had personal property before the effective date other than new locations.

Lamar argued that the billboards were covered because they had been reported to Liberty Mutual through the original application that identified Lamar as “one of the largest and most experienced owners and operators of outdoor advertising structures in the United States” and stated, “[c]urrently, Lamar operates more than 149,000 billboards and more than 97,500 logo sign displays across the country.” The court held that this documentation did not amount to a report on the property because, “‘report’ necessitates that the insured ‘relate’ or ‘give an account of’ the subject being reported.”

Interestingly enough, the court stopped short of identifying what type of “report” would have satisfied Lamar’s burden of reporting close to 250,000 individual units of property around the country. What is most curious is how Liberty Mutual could insure a company in the business of “outdoor advertising structures” and later turn around and allege that the very same structures were not covered under the policy.

According to local news reports, this court decision cost Lamar Advertising approximately $16 Million. If you have property that you believe is covered, it pays to check with your insurer to verify that it has knowledge of and intends to cover your property, especially if this property is not at one of the regularly scheduled locations on the policy.