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14-P-422 Appeals Court

MORONEY BODY WORKS, INC. vs. CENTRAL INSURANCE COMPANIES.

No. 14-P-422.

Worcester. January 12, 2015. - August 6, 2015.

Present: Fecteau, Wolohojian, & Massing, JJ.

Insurance, Fire, Property damage, Construction of policy, 

Coverage, Amount of recovery for loss. Contract, 

Insurance. Damages, Breach of contract, Repairs.

Practice, Civil, Damages.

Civil action commenced in the Superior Court Department on 

February 13, 2012.

The case was heard by Richard T. Tucker, J., on motions for 

summary judgment.

William A. Schneider for the defendant.

David K. McCay for the plaintiff.

WOLOHOJIAN, J. We consider whether a commercial property 

insurance policy issued by Central Insurance Companies (Central) 

provides coverage and, if so, to what extent, for damage to a 

bookmobile caused by a fire at its insured, Moroney Body Works, 

Inc. (Moroney). Central relies principally on two provisions of 
2

its policy to support its denial of coverage. First, it 

contends that the "other insurance" provision means that 

Central's coverage does not come into play until the policy 

limit of a Massachusetts garage insurance policy issued to 

Moroney by Pilgrim Insurance Company (Pilgrim) is exhausted.

1 

Second, Central argues, in the alternative, that its liability 

is limited to the cost of repairing the bookmobile. We conclude 

that because the two policies insured the same interest in the 

same property against the same risk, Central's "other insurance" 

provision applies. We also conclude that the "loss payment" 

provision of Central's policy limits its liability, at its 

election, to the cost of repair. We accordingly reverse the 

summary judgment in favor of Moroney on its breach of contract 

claim.

1. Background. The facts are undisputed. Moroney

manufactures specialized truck bodies in Worcester. On April 7, 

2011, a fire began in one vehicle at Moroney's facility and 

spread to a custom-built bookmobile that had just been completed

for the city of Beverly (city). The city refused to accept 

delivery of the bookmobile after the fire.

Moroney had two insurance policies at the time of the fire: 

a commercial property policy issued by Central, and a garage

 

1 Pilgrim entered into a settlement with the plaintiff and 

is no longer a party in this case.
3

insurance policy issued by Pilgrim. Moroney demanded payment 

under both. Central denied liability. Pilgrim's policy 

provided primary coverage, and Pilgrim agreed that its policy 

covered the cost of repairing the bookmobile. It paid 

$12,449.82 based on its appraiser's estimate of the repair costs 

-- an amount Moroney thought inadequate given its own estimate 

of the repair costs.

Moroney sued both insurers. The claims against Pilgrim 

were resolved when it paid an additional amount which, in 

combination with Pilgrim's earlier payment, resulted in Moroney 

receiving more than the repair costs. Central, on the other 

hand, persisted in denying liability. Ultimately, Central and 

Moroney cross-moved for summary judgment, and those motions were 

decided in favor of Moroney on its breach of contract claim.

2

2. Discussion. a. Other insurance. Central does not 

dispute that the damage to the bookmobile was "direct physical 

loss of or damage to Covered Property at [Moroney's] premises," 

as covered by its policy. Instead, Central argues that its 

coverage is excess to coverage under Pilgrim's garage insurance

policy and that it (Central) therefore has no liability unless 

the loss exceeds the coverage limit of Pilgrim's policy. 

 

2 Moroney also made claims for breach of the covenant of 

good faith and fair dealing and a violation of G. L. c. 93A. 

The motion judge allowed Central's motion on these claims, and 

there is no appeal from that decision.
4

Central relies on the following "Other Insurance" provision of 

its policy:

"2. If there is other insurance covering same loss 

or damage, . . . we will pay only for the amount 

of covered loss or damage in excess of the amount 

due from that other insurance, whether you can 

collect on it or not. But we will not pay more 

than the applicable limit of insurance"

(emphasis added).

"'Other insurance' clauses, clauses designed to establish a 

policy's relationship with other policies covering a loss, were 

first developed in the real property fire insurance field in 

order to prevent owners from overinsuring." Mission Ins. Co. v. 

United States Fire Ins. Co., 401 Mass. 492, 495 (1988). Such 

clauses apply where there are two or more concurrent policies 

that "insure the same risk and the same interest, for the 

benefit of the same person, during the same period."3 Boston Gas 

Co. v. Century Indem. Co., 454 Mass. 337, 361 n.36 (2009), 

quoting from 23 Holmes, Appleman on Insurance § 145.4[C], at 34 

 

3 "In general, there are three types of 'other insurance' 

clauses -- pro rata, escape, and excess." Mission Ins. Co. v. 

United States Fire Ins. Co., supra. "Pro rata clauses provide 

that, if other insurance is available to the insured, the policy 

containing the pro rata clause will contribute to the loss in 

the proportion that its policy limit bears to the total limit of 

all available policies. Escape clauses provide that, if there 

is other insurance available to the insured, the policy 

containing the escape clause will pay no benefits. Excess 

clauses provide that, if there is other insurance available to 

the insured, the policy containing the excess clause will pay no 

benefits until such other insurance is exhausted." Id. at 495 

n.3. The "other insurance" clause in this case made Central's 

coverage excess to "the amount due" under the Pilgrim policy.
5

(2d ed. 2003). "It is generally held that in order for an other 

insurance clause to operate in the insurer's favor, there must 

be both an identity of the insured interest and an identity of 

risk."4 15 Couch, Insurance § 219:14 (3d ed. 2005).

Our cases have not previously addressed what it means for 

the insured interests of two different policies to be the same.5 

We begin by noting that although Pilgrim's policy was a garage 

liability policy, and Central's was a commercial property 

policy, that distinction alone is not dispositive. Instead, the 

inquiry turns on the terms of the respective policies.

Although the record does not explicitly disclose the basis 

upon which Pilgrim made payment, coverage under the Pilgrim 

policy apparently lay under Section VII (Physical Damage 

 

4 "The rule that the risks be identical in order for an 

'other insurance' clause to apply does not mean that the total 

possible coverage under each policy be the same, but merely that 

with respect to the harm which has been sustained there be 

coverage under both policies." 15 Couch, Insurance § 219:14. 

There is no dispute that the same risk (fire) in this case was 

covered under both policies. Cf. McCormick v. Travelers Indem. 

Co., 22 Mass. App. Ct. 636, 639 (1986) (pro rata "other 

insurance" clause did not apply where the two policies insured 

against different risks, specifically, one insured against 

damage caused solely by windstorms and one against damage caused 

by water). See also Liquor Liab. Joint Underwriting Assn. of 

Mass. v. Hermitage Ins. Co., 419 Mass. 316, 324 n.6 (1995), 

citing 8A Appleman, Insurance § 4907.65, at 367-368 (1981).

5 Cases involving "other insurance" clauses often arise when 

two policies have competing other insurance provisions and the 

question is how to allocate or divide liability between the two 

carriers. See, e.g., Mission Ins. Co. v. United States Fire 

Ins. Co., 401 Mass. 492 (1988). We are not presented with such 

a situation here.
6

Coverage), which provided comprehensive coverage for covered 

"autos" damaged by fire.6 Covered "autos" included vehicles 

owned by Moroney, such as the bookmobile. The Central policy 

covered "direct physical loss of or damage to Covered Property 

at the premises." "Covered Property" included Moroney's 

building, fixtures, machinery, equipment, personal property 

owned by Moroney to maintain or service the building, and 

 

6 We have inferred the basis of coverage from the fact that 

the joint statement of undisputed facts states that Moroney 

owned the bookmobile. Had ownership of the bookmobile not been 

admitted, or if the city were the owner, then our analysis would 

have been different. In that case, Moroney's interest in the 

bookmobile would have been as a bailee for hire, see Wright v. 

Heil Equip. Co., 357 Mass. 74 (1970) (repairer was bailee for 

hire of tractor left in its custody for repairs); Black's Law 

Dictionary 141 (6th ed. 1990) ("a mechanic to whom an automobile 

is entrusted for repairs is a bailee for hire"), and coverage 

would lie under a different provision of the Pilgrim policy. 

Bailees generally have been held to have an insurable interest 

in the bailed property that is separate from the interest of the 

bailor. See, e.g., 43 Am. Jur. 2d Insurance § 186 (2013); 44 

Am. Jur. 2d Insurance § 939 (2013). In those circumstances, the 

insured interest under the Pilgrim and Central policies would 

not have been the same, and Central would not have been entitled 

to the benefit of the "other insurance" provision in its policy. 

See Atlantic Mut. Ins. Co. v. Cooney, 303 F.2d 253, 268 (9th 

Cir. 1962); Employers' Mut. Cas. Ins. Co. v. Hughes, 780 F.

Supp. 2d 1204, 1208 (N.D. Ala. 2011) (insured's interest in 

value of her property is not the same as her interest in making 

her mortgage payment in event home becomes uninhabitable, and 

thus other insurance clause does not apply); De Foor v. 

Northbrook Excess & Surplus Ins. Co., 128 Ill. App. 3d 929, 936 

(1984) (vendor's legal interest in property is distinct and 

different from vendee's equitable interest in insured property). 

See also generally the discussion in United Natl. Ins. Co. v. 

Mundell Terminal Servs., Inc., 915 F. Supp. 2d 809, 823-825 

(W.D. Tex. 2012).
7

business personal property.

7 Thus, although employing different 

language, both policies insured Moroney's interest as owner of 

the bookmobile from the risk of fire. Because both policies 

insure the same insured's interest (Moroney's ownership) in the 

same property (bookmobile) against the same risk (fire), 

Central's "other insurance" provision applies. Accordingly, 

Central's liability does not begin until Pilgrim's policy limit 

is exhausted.8

b. Loss payment. Even if Central were not entitled to the 

benefit of its "other insurance" provision, Moroney would fare 

no better because of Central's loss payment provision:

"4. Loss Payment

"a. In the event of loss or damage . . . at our 

option, we will either:

"1) Pay the value of lost or damaged property;

"2) Pay the cost of repairing or replacing the 

lost or damaged property . . . ;

"3) Take all or any part of the property at an 

agreed or appraised value; or

"4) Repair, rebuild or replace the property with 

other property of like kind and quality . . . .

"We will determine the value of lost or damaged 

property, or the cost of its repair or replacement, 

 

7 Although we need not decide the question, within the 

category of business personal property, coverage for the 

bookmobile could be found either as "personal property owned by 

you and used in your business," or as "stock," defined as 

"merchandise held in storage or for sale, raw materials and inprocess or finished goods."

8 It is undisputed that Pilgrim's policy limit has not been 

reached.
8

in accordance with the applicable terms of the 

Valuation Condition in this Coverage Form or any 

applicable provision which amends or supersedes the 

Valuation Condition."

The function of this provision is unambiguous. See Olson

v. Le Mars Mut. Ins. Co., 269 Neb. 800, 807-808 (2005); Colorado 

Cas. Ins. Co. v. Sammons, 157 P.3d 460, 465, 466 (Wyo. 2007). 

Compare Society of St. Vincent De Paul in the Archdiocese of 

Detroit v. Mt. Hawley Ins. Co., 49 F. Supp. 2d 1011, 1018 (E.D. 

Mich. 1999). By its terms, the provision allows Central to 

select whichever payment option it prefers, "effectively 

insur[ing] the property for the lesser of actual cash value or 

the cost to repair or replace the damaged property." Olson v. 

Le Mars Mut. Ins. Co., supra at 808. See Colorado Cas. Ins. Co.

v. Sammons, supra. The judge accordingly erred when he awarded 

Moroney $126,232.20, representing the difference between the 

original contract price for the bookmobile ($156,900) and the 

amounts received in settlement with Pilgrim (totaling 

$30,667.80). Moroney was not entitled to receive anything more 

than its repair costs.

Contrary to Moroney's argument, the last paragraph of the 

quoted loss payment provision does not alter Central's right to 

choose the lesser measure of damages. Instead, it pertains only 

to the method of valuing the loss. In other words, Central 

retained the right to choose whether to pay to replace or repair 
9

the bookmobile, but the value of those repair or replacement 

costs was subject to the valuation provision of the policy.

9 

Moroney is also not helped by the valuation provision in the 

premier plus endorsement, which states that finished stock will 

be valued at the selling price.10 That provision modifies the 

valuation provision of the policy, not the loss payment 

provision.

3. Conclusion. For these reasons, we conclude that 

Central is relieved of liability under the other insurance 

provision of its policy, and that, even were that not the case,

its exposure would be limited to Moroney's repair costs.

That portion of the judgment that entered in Moroney's 

favor on its breach of contract claim is reversed. In all other 

respects the judgment is affirmed.

So ordered.

 

9 The valuation provision provided: "We will determine the 

value of Covered Property in the event of loss or damage as 

follows: . . . At actual cash value as of the time of loss or 

damage." This provision does not apply because Central chose to 

compensate Moroney only for its repair costs.

10 "We will determine the value of finished 'stock' you 

manufacture, in the event of loss or damage, at: (1) The 

selling price, as if no loss or damage occurred; (2) Less 

discounts and expenses you otherwise would have had."