When is a Sheet of Glass not Glass? #insurance #glass #claims
A broker came to me with a simple glass claim, which the individual claims officer clearly did not want to pay. After going down several dead ends and unnecessary enquiries, they denied the claim stating that it was not ‘fixed glass’ and therefore not covered. Clearly the loss was and so I drafted up a detailed opinion on how the business pack policy responded.
At the end of the process, I did feel quite depressed that after over 40 years of research, study and practical experience, my career had peaked at training claims officers on how to pay a glass claim. This, I was taught within the first 6 weeks of joining a claims department at the age of 16. Of course, it was much more than this. It needed to be done and I was happy to do it as I wanted to see the client be paid for a valid claim and stop judging our industry poorly – and also for the broker’s sake, as I did not want to see him lose the valuable account over a wrong decision.
For those interested, here is the analysis. It does show the need to read the entire policy and not just focus on one or two paragraphs. This is equally true when you think something is paid. I do not name any one as I do not wish to embarrass any individual or company. I have, therefore, taken out names and dates. Before I start, I would say that liability was granted the same day as the broker passed the opinion onto the Insurer concerned. My opinion read as follows:
I am advised that the Insured was in the process of upgrading their building by constructing a steel framed awning to it. At the time of the glass breakage the steel framework had been fabricated and installed. As such, it formed part of the building.
Two sheets of toughened/shatterproof glass had been ordered and received by the Insured in the prior policy period and were to be installed on the ddmmyy.
The last step in the process was to tighten down the bolts that were fixing the glass to the steel frame. During the tightening down process, one of the bolts was over-tightened and the glass shattered.
The insurer has been reviewing the claim for several months and issued a declinature letter, which was received by your office today.
I have used the xx badged xx Business Pack Product Disclosure Statement (PDS) and Policy Wording [policy print number and date removed] in formulating my opinion.
I understand that there has been a series of questions around whether the loss occurred during the current period of insurance, or in the prior period, as well as other issues, but these all appear to have been resolved.
Was the Glass Fixed?
This, has been the last of many issues which has been focused upon in determining whether the loss constitutes a valid claim under the Policy. This in my opinion this is irrelevant. Let me explain my reasoning.
As [Insurer X] have pointed out, in their letter of declinature of [ddmmyy], the Policy does have an exclusion under Section 1, Business Property, that states:
“[x.] We will not cover loss of or damage to:
[iv.] Glass or signs except where You are a tenant of a building and are required by the lease to insure Glass; or ….”
Does this mean that if your insured was a bottle manufacturer, or glazier, they would have no cover at all for any damage to any of their stock from fire or storm? What of the shop keeper that has glass bottles of a products, such as pharmaceuticals or household cleaning items? Is only the contents of the jar covered along with the tin lid, but not the glass jar/container?
Of course not. I am certain that [Insurer X] have paid for claims with such losses for decades. There are three primary reasons for an exclusion:
- there is a more specific policy to cover the property;
- the property or peril risk is uninsurable; and/or
- the Underwriter excludes the property or peril, but may consider the risk subject to further satisfactory underwriting information.
To me, it is only Glass that can be covered under a separate Glass Policy or Section of the Policy covering Glass. In this case, that is excluded by Policy Exclusion [x. iv]. of the Section 1, Property Damage.
The glass bottles of a shop keeper or glaziers stock are covered for fire etc as they are certainly not uninsurable.
I next turn to the definition of Glass. This is defined in both the “Words with special meaning” at the beginning of the policy (these start at page x) and in Section x of the policy “Glass”.
I start with the definition of Glass in the “Words with special meaning”. At page [x] it states:
“Words with special meaning
Some words have special meaning wherever they appear in the Policy:”
At page xx it states:
- fixed Glass forming part of or fixed to the exterior of the Building including Glass in fixed signs; or
- fixed internal Glass including fixed Glass in furniture, counters, shelving and showcases, fixed and hanging mirrors, fixed washbasins, sinks, toilets, toilet pans and cisterns, contained in the Building.
Glass includes External Glass, Internal Glass and Specified Glass as defined in the Glass Policy Section.”
This is mirrored in the Definition Section in Section [x] – Glass.
Section [x] starts by saying, at page [xx], that this Policy Section covers “Breakage of Glass at the Premises”.
It then goes on to again define what is meant by “Glass” and some important terms that are relevant to the loss under review as:.
Some words have special meaning wherever they appear in this Policy Section. These words and their meanings are listed below:
“External Glass” means glass, or plastic material used as glass fixed in external windows, doors, showcases or skylights forming part of the Building.
Glass” means ‘Internal Glass’, ‘External Glass’ and ‘Specified Glass’
“Internal Glass” means:
i. glass, or plastic material used as glass in internal partitions, windows and doors, glass in counters, glass forming shelves and/or stock restraints, interior showcases, fixed mirrors and other fixed internal glass including ceramic vitreous china urinals, toilet pans and hand basins; and
ii. frames of showcases, display cabinets and counters containing the broken Glass.
“Sign” means Glass or plastic that forms part of a Sign.
“Specified Glass” means Glass specifically designated in the Schedule under Specified Glass.”
If [Insurer X] do not regard the glass sheet that was broken as “fixed glass”, then I agree that the sheet is not covered under Section [x] of the policy, as this type of “Glass” is not covered by this Section. HOWEVER, the loss is then claimable under Section 1, Property as the sheet of material damaged (we can no longer call it Glass as it does not meet the definition in the Policy) is not caught by Section 1 Business Property Exclusion x. iv. mentioned earlier.
Looking at Section 1, Business Property I note there are Extra Covers. This states on page [xx]:
When damage to Property Insured is covered by this Policy Section, We will pay for the following costs that are incurred as a result of that damage.
Unless stated otherwise below, any amounts payable under these extra covers apply in addition to the Sum Insured.
1. Capital additions
If Buildings or Contents are insured and,
A. Buildings, or part of them, are in the process of being constructed, erected, altered or added to; or
B. Contents are in the process of being installed or modified,
We will pay for loss or damage to the new additions or installations up to an additional:
i. $500,000; or
ii. 20% of the total Sum Insured on Buildings and Contents,
whichever is the lesser amount. [emphasis mine]
Here, the work is far less than either the $500,000 or 20% of the total Sum Insured on Buildings and Contents.
Again, this is normal in a business pack or ISR Policy as the insurer requires the Insured to purchase a separate Contract Works policy for major projects, but are happy to carry the risk for minor ones within the Business Pack policy.
Insurance is not there to catch people out, it is there to protect them against genuine fortuitous events but at the same time, the underwriter requires a fair and reasonable premium in return. Hence the exclusions and limitations where there are more specific policies.
Turning now to the cover afforded by Section 1, Business Property, the Policy states at page [xx]:
Section One – Business Property
About this Policy Section
This Policy Section covers physical loss of or damage to Your Property Insured during the Period of Insurance. We do not cover the theft or breakdown of Your Property Insured under this Policy Section.
Turning now to the Section 1, Business Property Exclusions, the [Insurer X] Policy contains a typical exclusion for faulty workmanship, but with the equally typical write back for resultant damage. This reads at pages [xx] and [xx+1]:
2. We will not cover You for loss or damage caused by:
h. i. error or omission in design, plan or specification or failure during testing;
ii. faulty materials or workmanship;
provided that this Exclusion 2(h) shall not apply to subsequent loss or damage to Your Property Insured (not otherwise excluded) resulting from an event referred to in this exclusion; [emphasis mine]
Therefore, cost of refitting the glass is not covered by the actual cost of the glass, sorry, “sheet of material” is clearly covered by the policy.
I understand that the Insured only ever intended to claim for the cost of the replacement sheet. They have acted in a fair manner throughout and while I am sure they have not read the policy, they are only claiming for what they lost during the unfortunate event and are not seeking any betterment.
The alternative is that the Glass was fixed. Fixed Glass is itself not defined. My brother is a glazier by trade and he refers to fixed glass as glass in a fixed pane that cannot be opened or closed. For example, in an aluminium framed sliding glass window, you have a sliding glass window and fixed glass window. This can also be referred to as a “fixed light”. This, I stress, is a trade term.
In insurance, without a definition, we regard “fixed” to take its ordinary meaning of being:
Fix /fiks/ verb / (fixed or fixt, fixing) – verb (t)
- To make fast, firm, or stable.
- To place definitely and more or less permanently.
- To settle definitely; determine: to fix a price.
- To direct (the eyes, the attention, etc.) steadily.
- To attract and hold (the eye, the attention, etc.).
- To make set or rigid.
- …….. [emphasis mine]
Using this definition, the glass was fixed building glass within the meaning of the Policy. It was attached to the building, after being tightened down by the bolts, it was not going to move and the damage resulted from it being over fixed to the building, if anything.
If this approach is taken, then the loss is, again, covered by the Policy and while there is no restriction, I support the Insured’s position that it would not be in the spirit of the cover to seek cover for the refitting of the pane of glass.
Whatever way you look at it, the loss is covered by the xx badged xx Business Pack Product Disclosure Statement (PDS) and Policy Wording and would be, by any quality Business Pack policy in the Australian market.
My recommendation is to have the denial of the claim reviewed by Insurer X in light of this opinion.
The Macquarie Dictionary, Revised 3rd Edition, edited by Delbridge A., Bernard JRL., Blair D., Peters P., and Yallop C., 2001, The Macquarie Library Pty Ltd, Sydney, p.708.