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Connecticut Federal Court Establishes Principles for Vandalism and Theft Losses Under Commercial Policies

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Mercedes Zee Corp. LLC v. Seneca Ins. Co., No. 3:14-cv-00119 (JAM), 2015WL9311343 (D. Conn. Dec. 22, 2015). In a case of first impression under Connecticut law, the court construed a provision in a commercial policy which stated that vandalism was a “Covered Cause of Loss,” but that the insurer “will not pay for loss or damage caused by or resulting from theft.” Intruders entered into a building, caused various property damage, and stole copper pipe. The court adopted and applied three principles. First, the clause requires an inquiry into the intruders’ purpose and intent as to each item of claimed damage, and that intent can change over the course of an intrusion. Second, the theft exclusion applies not only to the value of the stolen property but also to damage that was necessary to or in furtherance of the theft. Third, the theft exclusion does not apply to loss or damage resulting from an attempted but unsuccessful theft, so such loss or damage constitutes covered vandalism. The court stated that it was not clear from the submissions whether or the extent to which any property damage occurred as a necessary part of any act of theft. It held it was necessary to conduct an item-by-item consideration of whether each specific damaged property resulted from vandalism or theft. Thus, it denied cross motions for summary judgment.