A typical "open peril" policy excludes payment for loss of personal property left "in the open." In Twenhafel v. State Auto Prop. and Cas. Ins. Co., No. 08-4275, 2009 U.S. App. LEXIS 20373 (7th Cir. Sept. 14, 2009), the court determined that storm-caused damage to insured's raw wood inventory stored outside under a tarp was not excluded by the policy.
The insured manufactured kitchen and bathroom cabinets. Wood used to make cabinets was stored outside under a heavy, industrial tarp. The tarp was secured with six-by-six oak beams and large concrete blocks weighing ninety pounds each placed on top of the tarp. A violent storm lifted the tarp and dropped the beams and blocks on the roof of a building 150 feet away. The exposed wood inventory was damaged by the rain.
The insured submitted a claim to State Auto. The claim was denied under an exclusion stating the insurer would not pay for loss or damage caused by or resulting from "rain, snow, ice or sleet to personal property in the open." The phrase "in the open" was not defined in the policy.
The insured sued. The district court determined because the inventory was covered by an industrial tarp, it was not exposed the elements and not in the open. Summary judgment was granted to the insured.
On appeal, it was noted the case presented an issue of first impression in the Seventh Circuit. State Auto relied on Victory Peach Group, Inc. v. Greater N.Y. Mut. Ins. Co., 707 A.2d 1383 (N.J. Super. Ct. App. Div. 1998), where the phrase "in the open" was equated with being left outdoors without protection from the elements. There, personal property was stored in a building in which the roof was being repaired. The workers nailed three large tarps over portions of the damaged roof for protection during the night. Nevertheless, the personal property was damaged by rain when the tarps blew off the roof. The damaged property was covered because it was in the building and not outside, exposed to the elements.
The Seventh Circuit disagreed that Victory Peach meant only property stored inside a building was entitled to coverage. The phrase "in the open" meant being left exposed to the elements, or, in other words, being unprotected from the elements. Therefore, the loss to the wood inventory was covered under the terms of the policy.
