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Our client has a Businessowners policy and used to be the tenant in the building with option to purchase the building. The last payment was made on December 6, 2015, and the warranty deed transferred on December 23, 2015. The insured did not notify our agency that they had purchased the building.

The policy provides coverage for newly acquired buildings and personal property up to $500,000. The insured suffered a fire on January 22, 2016. The damage to the contents was being covered for the full amount (over $20,000); however, the adjuster indicated that the building would not be covered, even under the newly acquired buildings provision. The adjuster indicated that the insured must already have building coverage for that coverage to extend to a newly acquired building. Is this correct?

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