Cost of Post-Loss Guard Services to Protect Covered Property Awarded

COMMERCIAL PROPERTY – LOSS CONDITIONS – COST OF GUARD SERVICES TO PROTECT THE COVERED PROPERTY AFTER LOSS
NIACC, LLC v. Greenwich Ins. Co.
(2nd Dept., decided 5/20/2008)

Plaintiff insured hired a guard service to protect its property following a fire loss. When Greenwich did not pay for the cost of those services, the insured sued.

In AFFIRMING the lower court's denial of summary judgment to Greenwich and grant of summary judgment to the insured, the Second Department agreed that certain provisions in the insured's policy which pertained to "Loss Conditions" were ambiguous and that, construed against Greenwich, the provisions required Greenwich to reimburse the insured for guard services retained to protect the subject property after a fire that was the covered cause of loss. Greenwich apparently had argued that the property was valueless after the fire and, therefore, there was nothing on the site to protect from further damage, but the Second Department found that the record on appeal did not support Greenwich's argument.

Although the decision does not quote the policy provision at issue, it probably was subparagraph a.(4) of the "Duties In The Event Of Loss Or Damage" condition of a commercial property policy, which provides:

a. You must see that the following are done in the event of loss or damage to Covered Property:

(4) Take all reasonable steps to protect the Covered Property from further damage, and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.