July 15, 2019

July 15, 2019

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Is a Recycling Bin With Wheels a Vehicle for Insurance Purposes?

So what happens when you run over a gas line with a wheeled electronic recycling bin in a residential building and rupture the gas line?  Does the building’s all risks insurance cover the cost of restoring the gas service?  Not according to the federal courts in New York.

In 1070 Park Avenue Corp. v. Fireman’s Fund Insurance Co., No. 18-1887-cv (2d Cir. Jul. 2, 2019) (Summary Order), the building sought coverage  from its insurer for the cost of restoring the gas line service after the rupture.  The insurer disclaimed coverage based on an exclusion for the costs associated with the testing of a gas system for integrity.  Here, after the gas line ruptured, the gas system was required by law to pass an integrity test before it could be turned back on.  The exclusion provided that there was no coverage for the costs associated with the enforcement of any law or ordinance that requires testing of a gas system for integrity.  The exclusion did not apply if the testing was required by a direct loss causing physical damage to covered property from, among other things, vehicles.  So, of course, the policyholder argued that the recycling bin was a “vehicle” because it had wheels so the exclusion should not apply.

Unsurprisingly, this argument was rejected by the district court and affirmed on appeal.  The circuit court held that it agreed with the district court that the word “vehicle” in the context of the insurance policy here clearly did not include the e-cycle bin.  The court noted that under New York law, insurance policies have to be interpreted according to common speech and consistent with the reasonable expectations of the average insured.  The court opined that not everything with wheels is a “vehicle” as that word is commonly understood.  The court held that the average insured would not reasonably expect that an exception that refers to “aircraft or vehicles” covers a recycling bin.  As the court stated, “vehicle” plainly focuses on transportation or conveyance.

Because the court agreed that the e-cycling bin was not a “vehicle” and that the gas systems exclusion applied, it agreed that the insurance company was entitled to summary judgment.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Larry P. Schiffer Commercial Insurance Reinsurance Litigation Lawyer
Partner

Larry Schiffer practices in the areas of commercial, insurance and reinsurance litigation, arbitration and mediation. He also provides advice on coverage, insurance insolvency, and contract wording issues for a wide variety of insurance and reinsurance relationships. 

Larry is active in legal and insurance industry associations where he has held various leadership positions. He has lectured in the US, Bermuda and the UK, and has been widely published on reinsurance and other insurance, litigation and technology topics in various national and...

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