Very good advice! Thanks for sharing the scenerio.

Perhaps what the examiner was trying to say--and how I would have handled it--was to change your estimate to show the excess loss being absorbed by the deductible.  The policy says the max "payable" for attached signs is $1,000... not the max covered being $1,000.

When examiners are changing hats between HO & Commercial, and property vs. casualty, this often becomes lost in the translation.

Mike, it says Limit of Insurance. Please explain in more detail how this could be an excess payment and how it could be absorbed. Odie, this was a standard ISO policy, no enhancements. That was one of my first questions to the examiner.

Tom, my reasoning was already given.  I've been staff for 3 different large carriers, and then handled similar losses for a multitude of other carriers as an independent.  This type loss was always handled in that manner, and never questioned.

It is not unlike a jewelry loss on an HO3, say with a theft loss of $3000 but the special limit of $1500.  If the policy has a $500 deductible, how much do you pay?  $1500 or $1000?  I was always taught and/or directed that the entire limit is payable, as long as the covered loss exceeds the limit plus the deductible.

Maybe some carriers don't subscribe to that train of thought, but I haven't run across them yet.  

The policy limit is $350,000.00 and the limit of insurance is within that limit of coverage. How can it possibly be absorbed in a CP 00 10. MSB apparently agrees with me, as it did not absorb the difference. Since this came up, I have talked to several of my GA friends and the agree that it cannot be absorbed.

Had the sign been an endorsement, say of $2,000.00 and the loss was $3,000.00, then yes, the deductible would have been absorbed, but in this case, it is not. I always, without fail, try to get the insured as much as possible under their contract, but not in this case.

I think I disagree with all the posters and agree with the company examiner as the neon sign attached to the building does not have a limit. (It becomes a fixture) Its only detached signs that have a limit and only for the 5 perils mentioned for coverage under "Outdoor Property". Rework the loss.

Tom, I'm assuming you're referring to MSB your estimating program.  I don't use it, but wasn't aware that it could interpret policy terms unless you are inputting specific limits and coverage codes to begin with.  But I can see where that could fail too, with the wide variety of coverages available.

Here is the language from the CP0010 Ed 04/02 that addresses this topic:

C. Limits Of Insurance

The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.The most we will pay for loss or damage to outdoor signs attached to buildings is $1,000 per sign in any one occurrence.

I am reading all 4 corners of the CP 00 10 04 02 and I will stand by my opine in my post. As pundits take all  the time you need, but the underwriters consider neon signs attached to buildings as fixtures and the $1,000. limit only applies to signs not attached to buildings for the 5 named perils.  In fact the CP 00 10 04 02 covers neon signs and tubing on resturants the same as other componants of the building for windstorm.

Gonna try this again...but it reformats everytime I hit the enter button.  There's a little word transposing down around the named peril part, that won't stay in edited form, but you can figure it out.    

Ray, I’ll agree with you part-way. After looking at the 4 corners, and then going smack dab into the middle, here’s what the CP0010 has to say about sign coverage.

2. Property Not Covered

Covered Property does not include:

q. the following property while outside of buildings:

Grain, hay, straw or other crops;

(1)

The argument is "fixtures", including outdoor fixtures which are # (2) paragraph under little a. building.

The search for the non existant definition of fixtures in the CP 00 10 04 02 and you will not find one. Therefore, you must use the common language meaning. One page 8 you will find Outdoor Property which spells out an optional extension of coverage for certain perils only. Please note fixtures are not listed. The signs mentioned mean stand alone pylon type only, meaning this section is not applicable in this loss.

Then you must fall back to the four corner rule and use the common language use of fixtures(by the nature of electrical connected) and on the building fit the only definition of fixture a reasonal person reading the facts could conclude.

sign

 [script removed]

3.

fixture

One entry found for fixture.

Main Entry: fix·ture http://www.merriam-webster.com/
Pronunciation: 'fiks-ch&r
Function: noun
Etymology: modification of Late Latin fixura, from Latin fixus
1 : the act or process of fixing : the state of being fixed
2 a : something that is fixed or attached (as to a building) as a permanent appendage or as a structural part fixture> b : a device for supporting work during machining c : an item of movable property so incorporated into real property that it may be regarded as legally a part of it
3 : a familiar or invariably present element or feature in some particular setting; especially : a person long associated with a place or activity

Would the reasonable person call neon signage a sign or a fixture?  Which common definition (sign or fixture) would apply to a neon sign?  If you lean toward fixture...then how do you differentiate the relationship between a neon sign on an owned building or on a leased building?  It is not a structural part of either, and is not a legal part of a leased building.

Folks,

You can bet your ice cream allowance that the carrier has danced to this music more than once and has a determination of what a "sign" is under their guidelines and policy provisions, as interpreted in the last court case. THAT determines what is and what ain't. For that carrier, that is.

The question of deductible absorption must also be addressed by the carrier on the loss. Some carriers will allow absorption by a sub-coverage and some carriers won't.

Submit your case either for or against in a suitable format to the supervisor, manager, or otherwise noteworthy person and what ever the decision might be ................. that's the answer.

This is the beauty of working commercial losses. Ya just don't know all the interpretations and policy provisions of each particular carrier unless you've worked many, many commercial losses for them and, even then, the company's stance can change on a moment's notice.

As far as MS/B absorbing the deductible, it can be done by setting up separate sub-coverages and addressing the deductible application.  But, that's another subject that can be discussed in another forum.

Happy Trails

With all due respect to Tom Toll, whom I consider to be one of the most learned members of this forum,  I would challenge him in the instant case for full coverage for the neon light fixture portion of the loss.

These are the type controversies that whet the appeitite of this public adjuster.  I would be delighted to accept the challenges on this claim, were I licensed in the state where this loss happened, on a contengency fee basis.  It would be my contention if the policy limitations for any exterior attached signs exceeded the limits that the deductible would be absorbed to the etent of that excess amount..  I would then address the issues related to ambiguities as to whether the neon lights attached to the buidling should be considered a light  fixture or a sign.   Since a fixture is subject to more than one meaning and it is not defined in the policy the ambiguity should be interpreted in favor of the most desirable outcome for the nondrafter of the contract. 

 When I decorate my commercial building  at Christmas time by temporarily attaching lights to the permanent hooks installed on my roof to spell out "MERRY XMAS"  I expect that if they are struck by lightning they will be covered under my commercial policy.  Further when my attached  neon lights that were installed to take advantage of illumination of a portion of my building I also expect them to be paid if struck by lightning. 

I may not win the battle but it certainly is not a slam dunk for insurers.

William S Cook

Florida Licensed Public Adjuster

William, I certainly respect your knowledge of policy also. I think intent may be the deciding factor. Your Christmas lights were not intended to display a business, rather decorate it. The intent of the sign I handled was to provide advertisement for that business, not a display such as yours. The sign as shown is not ornamental/decorative in design, rather displayed to attract and display the business. This has gone all the way to the top of this company and they say the $1,000.00 limit will stand.

The neon tubing is permanently attached to the metal sign, therefore becomes a part of the sign. Please understand this is a metal fabricated sign with letters, with neon letters highlighting the letter on the metal box frame.

Now then, doesn't this make us all back up and think a little?  A pretty simple loss when you think about it to begin with.

I (me) and most would have taken the (it's a sign stance) originally.   But after Tom's last post...and Trader's opinion...maybe the neon tubes are fixtutres (call them night-time enhancements) attached to the sign.  You have a sign that can be seen/read during daylight, but at night then the neon highlights it.  Hmm?  I've always found a way to pay for the pole or the wood/brick monuments separate from the sign itself.  Same thing with the roof-top A/C surrounds that had signs attached.  Those were separate structures with sign facings attached.

More opinions--and discussion--like this thread envoked, will go a long way for the readers here. Just my thoughts.  Don't claim to have had the ultimate answer, but posed what I thougt were all the questions and potential answers.

By the way, Tom, you said the carrier stood by the $1000 limit.   Did that mean "payable" or "coverage limit only"?

Certainly it would appear that there exist enough varied interpretations among this learned forum that the matter is subject to more than one interpretation. This is the standard that has been used by the courts in the past in many instances to reverse a non-payment stance by the top echelons of the insurers in favor of a payment to the insured.

This is what the courts in NY had to say about ambiguity........

An exclusion from coverage "must be specific and clear in order to be enforced" (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311), and an ambiguity in an exclusionary clause must be construed most strongly against the insurer (see Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398; Thomas J. Lipton, Inc. v Liberty Mut. Ins. Co., 34 NY2d 356, 361). However, an unambiguous policy provision must be accorded its plain and ordinary meaning (see Sanabria v American Home Assur. Co., 68 NY2d 866, 868), and the plain meaning of the policy's language may not be disregarded in order to find an ambiguity where none exists (see Garson Mgt. Co. v Travelers Indem. Co. of Ill, 300 AD2d 538, 539; Acorn Ponds v Hartford Ins. Co., 105 AD2d 723, 724). "[P]olicy exclusions are to be read seriatim and, if any one exclusion applies, there is no coverage since no one exclusion can be regarded as inconsistent with another" (Sampson v Johnston, 272 AD2d 956, 956; see Hartford Acc. & Indem. Co. v Reale & Sons, 228 AD2d 935, 936)....

This section is posted in regard to addressing interpreting ambiguity and not to the issue if the neon lights versus sign is ambiguious as that would be for others to decide.

I am not being adversarial to the posters but posting views  from my sides perspective. I learn new things on a daily basis usually as a result of controversy. I am never offended by differing opinions because my batting average includes many strikeouts. I consider being allowed to participate in the CADO forum a valuable asset.
Thanks to ALL
William S Cook
Florida Licensed Public Adjuster

Lets throw this question in this discussion. The metal building has a gable end facing I-40 and the tan baked on paint finish building has the gable end painted navy blue background for a yellow painted lettered sign that reads "Tom's Bar B Q". Is this sign a part of the building on the same policy.?   Why ?

For that matter, Ray, let's say the painted or decal signage is on large storefront windows.  Now you have glass coverage limits and sign limits to work with.  

The painting of a metal surface involves an adhesion process to the metal. It is not mechanically attached to the metal, so the painted lettering would be considered custom lettering to a metal surface and does not fall into the Limit of Insurance of outdoor signs. The lettering on glass would fall into the same category, custom lettering, if glass is covered through an extension or endorsement to the policy.

If a metal building is damaged, you cannot exclude the paint and just pay for metal. If it is cladded with a paint, it forms and becomes a part of the metal, through adhesion. Of course, this is left up to the carrier, but would be my interpretation.

Tom is correct about the signage/decal and/or lettering on storefront glass not having limitations.  But it's because they are normally applied on the interior surfaces, and therefore not Outdoor Property.   A trick question. 

Ray, where are you?

Problems are sometimes created because an agent does not understand policies they are selling to homeowners and to commercial businesses. Fortunately this agent has been educated on the CP 00 10. The agent also thought BI was a part of the policy. The insured's have placed additional coverage on their sign, have also taken out BI coverage on their business, which is quite successful. All parties concerned are now happy. Proof of Loss has been submitted and claim will be paid.

There has been a lot of down time for many. Now would be a good time to study all policies and perhaps enroll in the FC&S services, either internet or hard copy. I don't have all the answers to coverage questions, but I have learned how to find them. Policies are not cut and dried, the courts can attest to that. Just learn them as best you can and then learn how to find the answers.

This was a loss I worked in 2005 in Houston. The loss was $126,000.  to 17 AC condensing units on top of a office/warehouse that was vacant. A copper thief got on the roof in some manner and stole the copper coils out of all the roof mounted units which were quite old. Nothing but the copper no sheet metal was left in place or beside the shell of the unit. The building had a vacancy permit and the coverage was CP 10 00 90 07 88 with the CP 00 10 04 02. The underwriter instructed for me to take a ROR and sent the Texas court opine that copper theft was not  (9) vandalizm peril spelled out in the policy.

The CP 20 also is named peril; however the CP 30 would cover this loss.

Wow... everyone sure has been batting the ball back and forth across the net on this one...  I think I'll stay out of it, only to say Neon Signs are really Electrical Light Fixtures weather they are attached to a building or not.  This includes if they are attached to the interior side also.

Underwriters see them as FIXTURES !

You could have just asked your insurance adjuster and saved your money. Do you work for them? Be prepared. You are about to be blasted.

No Larry, I think it needs an L like flees.....or maybe fleas,,,,or possibly fleece......

JWG