Mobile Vehicle Not Covered Despite Insured's Claim Of Warehousing

Commercial Property	Property Defined
Mobile Equipment	Self-Propelled Machine Excluded

A commercial property policy covering an insured's buildings and business personal property was covered by a standard commercial policy language. The insured operated both a sand and gravel operation, as well as that of a construction operation, out of the same premises. Three buildings and their contents were listed on the policy as being covered.

A fire occurred, which caused substantial damage to the covered property. One of the items damaged in the fire was a front-end loader. The insured filed a claim for the loader. This loader was mobile equipment usually kept at the gravel pit premises- a different location.

The loader was only at the insured location at the time of the fire because of the need for repair and maintenance. Further, the insured had an inland marine policy for this type of mobile equipment, but the loader had never been listed on the inland marine policy. Finally, the value of the loader itself was greater than the entire limit of insurance purchased as business personal property for the building where the loader was being repaired.

The insurance company denied coverage for the loader based on the policy language, which defined property not covered as:

" . . . O. Vehicles or self-propelled machines (including aircraft or watercraft)that:

(1)Are licensed for use on public roads; or

(2)Are operated principally away from the described premises.

This paragraph does not apply to:

(1) Vehicles or self-propelled machines or autos you manufacture, process or warehouse;

(2) Vehicles or self-propelled machines, other than autos, you hold for sale; . . . "

The insurance company contended that the loader was a vehicle or self-propelled machine, principally kept away from the described premises, and was only at the premises for maintenance and repair-not warehousing or processing prior to a sale.

The insured disagreed with the insurance company's definitions of warehousing and processing, claiming that when such ambiguity existed, the decision should be rendered in favor of the insured.

The original trial court decision agreed with the insured and against the insurance company.

Upon appeal, the court examined the meanings of the terms "warehousing" and "processing" in the context of the entire provision. It concluded that these terms were not ambiguous as they related to a manufacturing operation or goods for sale. As a result, the court determined that the loader was not covered under the policy, and it overturned the lower court's decision in favor of the insurance company.

Opperman dba Opperman Sand & Gravel, Plaintiff-Appellee v. Heritage Mutual Insurance Company, Defendant-Appellant. South Carolina Supreme Court, SCSCt. No. 19856. July 16, 1997. CCH 1997 Fire and Casualty Cases, Paragraph 6211.