{"id":895055,"date":"2018-10-16T12:40:40","date_gmt":"2018-10-16T18:40:40","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=895055"},"modified":"2018-10-16T12:40:40","modified_gmt":"2018-10-16T18:40:40","slug":"direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/","title":{"rendered":"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion"},"content":{"rendered":"

Christina Phillips | Property Insurance Coverage Law Blog<\/a> | October 2, 2018<\/p>\n

Is loss or damage caused by a tenant covered under an all-risk insurance policy? Like most issues addressed in the Merlin blog posts, the answer is: it depends on the facts and the policy language.<\/p>\n

The Sixth Circuit in\u00a0KVG Properties, Inc. v. Westfield Ins. Co.<\/em>, 2018 WL 3978211 (6th Cir. Aug. 21, 2018)\u00a0recently addressed this issue under a factual situation becoming more and more prevalent. Unbeknownst to KVG, it\u2019s commercial tenants were growing marijuana in the property. Ultimately, the tenants were caught during a raid by the U.S. Drug Enforcement Agency. KVG immediately moved to evict the tenants and gain possession of the property. In its eviction proceedings KVG alleged that the tenants were \u201cillegally growing marijuana.\u201d The tenants were evicted and KVG obtained control of the property. However, the tenants had caused extensive damage to the property to accommodate their marijuana operations. The tenants had removed walls, changed duct work, cut holes in the roof, and severely damaged the HVAC systems. It was alleged the tenants had caused nearly $500,000 worth of damage.<\/p>\n

KVG ultimately filed a claim against its insurer, Westfield. Westfield denied the claim based on the Dishonest or Criminal Acts Exclusion. In relevant part, the exclusion provides that Westfield will not pay for loss or damage caused by or resulting from any \u201c[d]ishonest or criminal act by you, any of your partners, members, officers, managers employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose.\u201d1<\/sup>\u00a0Summary judgment was granted for Westfield. KVG appealed.<\/p>\n

On appeal, the Sixth Circuit concluded that the property had sustained physical damage, caused by some risk (or risks) of direct physical loss. The Sixth Circuit then turned to whether the loss and damage was excluded as a result of the Dishonest or Criminal Acts Exclusion. The court focused its inquiry on the core question of whether the tenants committed a criminal act within the meaning of the policy. Dismissing KVG\u2019s argument that Westfield could not invoke the exclusion unless the tenants had been convicted of a crime, the Sixth Circuit affirmed the lower court\u2019s grant of summary judgment. It found there was no dispute that the tenants were engaged in illegal, criminal conduct. In that regard, the Sixth Circuit noted that KVG admitted as much in its eviction proceedings when it stated that the \u201ctenant illegally grew marijuana.\u201d The appellate court also noted that the raid by the DEA was part of a criminal investigation. As such, the Sixth Circuit concluded that Westfield had proven that the Dishonest or Criminal Acts Exclusion applied to bar coverage.
\n__________________________
\n1<\/sup>\u00a0KVG did not argue and thus the Court did not address whether the exclusion should apply to someone who obtains \u201centrustment\u201d by false pretenses.<\/p>\n","protected":false},"excerpt":{"rendered":"

Christina Phillips | Property Insurance Coverage Law Blog | October 2, 2018 Is loss or damage caused by a tenant covered under an all-risk insurance policy? Like most issues addressed in the Merlin blog posts, the answer is: it depends on the facts and the policy language. The Sixth Circuit in\u00a0KVG Properties, Inc. v. Westfield… Continue reading Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3,9721],"tags":[9895,3,56],"class_list":["post-895055","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","category-property-damage","tag-advise-consult","tag-insurance-claims","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nDirect Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.<\/title>\n<meta name=\"description\" content=\"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise & Consult, Inc.\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\" \/>\n<meta property=\"article:published_time\" content=\"2018-10-16T18:40:40+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:site\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\"},\"headline\":\"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion\",\"datePublished\":\"2018-10-16T18:40:40+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\"},\"wordCount\":482,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"keywords\":[\"Advise & Consult\",\"Insurance Claims\",\"property damage\"],\"articleSection\":[\"Insurance Claims\",\"Property Damage\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\",\"name\":\"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\"},\"datePublished\":\"2018-10-16T18:40:40+00:00\",\"description\":\"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#website\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"name\":\"Advise & Consult, Inc.\",\"description\":\"Construction Expert Witnesses\",\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\",\"name\":\"Advise & Consult\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"contentUrl\":\"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png\",\"width\":162,\"height\":75,\"caption\":\"Advise & Consult\"},\"image\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\",\"https:\/\/x.com\/adviseconsult\",\"https:\/\/www.linkedin.com\/company-beta\/204526\/\",\"https:\/\/www.youtube.com\/user\/MrConstructionExpert\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg\",\"caption\":\"admin\"},\"sameAs\":[\"http:\/\/www.expertwitnessinconstruction.com\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.","description":"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/","og_locale":"en_US","og_type":"article","og_title":"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.","og_description":"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language","og_url":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/","og_site_name":"Advise & Consult, Inc.","article_publisher":"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","article_published_time":"2018-10-16T18:40:40+00:00","author":"admin","twitter_card":"summary_large_image","twitter_creator":"@adviseconsult","twitter_site":"@adviseconsult","twitter_misc":{"Written by":"admin","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/#article","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/"},"author":{"name":"admin","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7"},"headline":"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion","datePublished":"2018-10-16T18:40:40+00:00","mainEntityOfPage":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/"},"wordCount":482,"commentCount":0,"publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"keywords":["Advise & Consult","Insurance Claims","property damage"],"articleSection":["Insurance Claims","Property Damage"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/","name":"Direct Physical Loss By Tenants Is Excluded Under Policy\u2019s Dishonest or Criminal Acts Exclusion - Advise & Consult, Inc.","isPartOf":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website"},"datePublished":"2018-10-16T18:40:40+00:00","description":"Is loss or property damage caused by a tenant covered under an all-risk insurance policy? the answer is: it depends on the facts and the policy language","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.myconstructionexpert.com\/blog\/direct-physical-loss-tenants-excluded-policys-dishonest-criminal-acts-exclusion\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#website","url":"https:\/\/www.myconstructionexpert.com\/blog\/","name":"Advise & Consult, Inc.","description":"Construction Expert Witnesses","publisher":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.myconstructionexpert.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#organization","name":"Advise & Consult","url":"https:\/\/www.myconstructionexpert.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","contentUrl":"https:\/\/www.myconstructionexpert.com\/blog\/wp-content\/uploads\/2015\/11\/AC-Red-Logo.png","width":162,"height":75,"caption":"Advise & Consult"},"image":{"@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/","https:\/\/x.com\/adviseconsult","https:\/\/www.linkedin.com\/company-beta\/204526\/","https:\/\/www.youtube.com\/user\/MrConstructionExpert"]},{"@type":"Person","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b01e71b7acadd7657af782b7ad1a30cc?s=96&d=mm&r=pg","caption":"admin"},"sameAs":["http:\/\/www.expertwitnessinconstruction.com"]}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2ztG6-3KQn","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/895055","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=895055"}],"version-history":[{"count":1,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/895055\/revisions"}],"predecessor-version":[{"id":895056,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/posts\/895055\/revisions\/895056"}],"wp:attachment":[{"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=895055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=895055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myconstructionexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=895055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}