In a landmark decision, a New York appellate court has reinstated a theft claim filed by Lok-N-Logs, Inc. against its insurer, Leatherstocking Cooperative Insurance Company. This case, decided on April 3 by the Appellate Division, Third Department, brings into focus contentious issues surrounding the interpretation of vacancy and occupancy clauses in a commercial multi-peril insurance policy. The core of the dispute involves the alleged theft of copper and brass from Lok-N-Logs' warehouse in Sherburne, Chenango County. The insurer denied the claim by citing exclusions related to the property's vacancy status, which discerningly do not define 'vacant' or 'unoccupied'—a pivotal factor in the court's decision to allow the case to proceed.

This case underscores the intricate challenges insurers face with vacancy clauses in commercial policies.

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The controversy began when Lok-N-Logs reported a break-in at their warehouse in April 2020, during which valuable materials were stolen. Leatherstocking Cooperative Insurance Company refused coverage for the claim, arguing that the property had been vacant for over 30 consecutive days, thus voiding coverage for vandalism, and had been entirely unoccupied for more than 60 days, which nullified all coverage under their policy terms. After the commercial tenants—a dog food business and another tenant—left in December 2019, Lok-N-Logs continued to use the warehouse to store construction materials, albeit sporadically. These occupancy actions included weekly visits by company personnel for maintenance and periodic garage sales, bringing into question what constitutes 'occupancy' under the insurance policy.

The lower court initially sided with the insurer, approving their motion for summary judgment due to the absence of daily operations at the property. However, upon appeal, the Third Department overturned this ruling. The appellate court found that the term 'vacant' generally implies a lack of contents, whereas 'occupancy' involves the property being used regularly—interpretations based on established New York case law. The testimony presented by the plaintiff, particularly from Lok-N-Logs' president, James Webb, suggested that the intent to use and maintain the warehouse was persistent, although not constant. This nuanced understanding of property usage led the court to believe that the factual matters should rightly be examined by a jury.

By sending the case back to the trial court, the appellate division has emphasized the need to assess vacancy and occupancy in the context of the specific contract and property in question. The ruling thereby keeps Lok-N-Logs' claim viable, allowing for a deeper exploration into how commercial properties with intermittent usage should be evaluated under such policies. This case provides a crucial reminder to insurers about the complexities of defining property usage in policy terms and highlights the necessity for clear, unambiguous language in drafting insurance agreements. As the commercial world continues to evolve, these definitions and their applications will become even more critical in determining insurance liability and coverage.