A corroded cast-iron pipe ruptured while it was carrying rainwater from the roof to the storm sewer. Unfortunately, the pipe was on the inside of the building. The water that rushed out following the rupture caused significant damage to Amish Connection's office so a claim was filed with State Farm Fire and Casualty Company. Unfortunately, State Farm denied the coverage because the policy limitation stated that interior damage by rain was not covered unless there was first damage to the building through which the rain then entered.

Amish Connections didn't agree and the case went to court and then to appeal. Click here to see how the courts looked at the terms "rain" versus "rainwater" in making their determination.

The commercial property coverage Causes of Loss-Special provides coverage for risks of direct physical loss or damage but then limits that broad statement by stating that it applies only if the loss or damage is not excluded or limited. After a number of exclusions are listed, four types of limitations are provided. These are for loss and damage that is not totally excluded but also not totally covered. It is important to carefully review them because they really do give a little and then take a little.

Click here to read the PF&M explanation of the Causes of Loss-Special Limitation sections.

Words are taken very seriously by the courts when determining coverage. Throughout the PF&M coverage analysis, important terms are discussed such as fire, riot, vandalism, and more within the specific type of coverage. However, because certain terms impact multiple lines-both commercial and personal-they are listed in the Practical Aids and Tips in order to provide some additional insight.

Click here to review the discussion on the term "vicarious liability."

Amish Connection had a mess on their hands following the loss, as would any business that was inundated with water. It could have resulted in a significant loss of income. However, with the right planning, their customers might not have noticed a loss had occurred. Have you talked with your clients about disaster planning?

Click here for an emarketing article you might want to post on your website or blog or use in a newsletter that could alert them to this important part of risk management.