Pair, Set and Match: Replacement of Undamaged Hotel Furnishings Ensuring a Uniform Look


...Dictionary.) But that is exactly what hotel furniture is—not only is it sold nightly as part of a room, but it is bought and sold daily on the new and used market.

The “consequential loss” provi- sion says nothing to the contrary; in fact, it neither requires that the damaged “merchandise” have been held for sale by a policyhold- er at the time damage occurred, nor that the “commodities or goods” be considered “merchan- dise” only if offered for sale. The lack of such limitations is with good reason—it is nonsensical to argue that hotel furniture loses its status as “merchandise” depend- ing upon its use at a given moment in time.

The Tie Goes to the Policyholder

In addressing the scope of the “pair and set” or “consequential loss” clauses, the issue can be one of a strict, limiting construction (by the insurers) versus a broader one (by the policyholder). It is important to bear in mind the well- settled rules of insurance contract interpretation in considering which position should win that fight.

Where insurance language is ambiguous, the language is inter- preted in favor of policyholders. See Jeffrey W. Stempel, Stempel on Insurance Contracts at §§ 4.08, 4.09 (3d ed. 2006) (discussing the two canons of insurance policy inter- pretation—“ contra proferentem ” and “reasonable expectations”—that lead to that result). Thus, if the clauses at issue are ambiguous with respect to coverage for match- ing furniture, the ambiguity must be resolved in favor of the policy- holder and matching furniture cov- erage thus exists.

A policy term is ambiguous if “it is reasonably susceptible of more than one construction.” Id . at 4-75 (footnote omitted). There can be no serious question that the position set forth above is, at a minimum, one of two reasonable views. And if that is the case, the policyholder wins. See Green Lawn Systems, Inc. v. American Economy Ins. Co ., 620 So.2d 1290 (Fla. Dist. Ct. App. 1993) (holding “merchan- dise” to be an ambiguous term that should be construed as necessary to maximize coverage).

One Solution: Revised Policy Language

Hotel policyholders and their brokers might consider purchasing coverage that expressly provides for replacement of matching hotel case goods. It is easy to imagine many ways to word such cover- age. For example, the following is based on language incorporated into a major hotel owner’s policy:

This Policy insures . . . The reduction in value or cost to replace undam- aged insured articles that are part of pairs or sets, including compo- nents or parts of similar inven- tory-type property and including furnishings, fixtures and equip- ment of a uniform design scheme or merchandise usually sold by lots, sizes, color ranges or other classifications, when such reduc- tion in value, replacement or repair results from loss, damage...