Newly Acquired Property Not Covered

Commercial Property	No Breach of Contract
90 Day Auto Coverage Expired	Fire

The insured property owners, who were partners, owned and managed several multi-unit apartment complexes covered by a commercial property policy. After buying a new apartment complex, they asked their broker to add it to the policy about a month later, requesting that the coverage start from the purchase date. Nearly two months after the purchase—and still within the 90-day window for newly acquired properties—the agent finally arranged to add the new complex to the policy.

The insurer responded by stating that coverage would not be backdated because additional information was required. Without it, a quotation would not be provided. If a quote is given, it would be based on the insurer's evaluation, not the existing rate. Additionally, that coverage would be contingent upon an inspection.

The broker initially provided partial information and asked for confirmation of coverage. The insurer reiterated its original response and requested the remaining details. Neither the broker nor the insurer followed up with further communication, and no billing for coverage occurred.

Approximately five months later, a fire severely damaged the apartment complex. The insured submitted a claim to the property insurer, who denied coverage. The insured then sued both the insurer and the broker, claiming breach of contract, negligence, and breach of fiduciary duty, among other allegations. The broker responded by filing a cross-suit against the insurer.

The trial court found in favor of the insurer in both the original case and the cross-suit. It determined that the 90-day property coverage extension had ended nearly four months before the loss occurred, and the insurer had not confirmed permanent coverage.

Upon appeal, the lower court's decision was affirmed in favor of the insurer.

S. Kornreich & Sons, Incorporated et al., Cross-Plaintiffs/Appellants v. Genesis Insurance Company, Cross-Defendant/Respondent. Superior Court of Los Angeles County, CalCtApp. No. B089803. July 15, 1997. CCH 1997 Fire and Casualty Cases, Paragraph 6216.