WILL A HOMEOWNERS POLICY COVER ARSON OF A VACANT HOUSE?

The Florida Fifth District Court of Appeal recently issued an opinion on this issue. In Botee v. Southern Fidelity Insurance Company, the court was faced with the question, “will a homeowners policy cover arson of a vacant house?” The court’s opinion regarding the arson of a vacant house was filed on February 6, 2015.

Arson of a vacant house

Arson of a vacant house

The Court made the following holdings: 1.Where the insured home was destroyed by an intentionally set fire, arson was encompassed within the “vandalism and malicious mischief” provision to exclude coverage under the insurance policy; 2. The policy exclusion was unambiguous; and 3. The plain and ordinary meanings of “vandalism” and “malicious mischief” include “arson.” Therefore, arson of a vacant house was not covered by the insurance in this case.

Homeowner’s policy’s vacancy exclusion, excluding from all-risk coverage to the structure losses caused by “vandalism and malicious mischief,” included “arson.”
A homeowner’s insurance policy’s vacancy exclusion, excluding from all-risk coverage to the structure losses caused by “vandalism and malicious mischief” if the structure had been vacant or unoccupied for more than 30 days prior to the loss included “arson.” Thus, there was no coverage for the loss to the insured’s home caused by an intentionally set fire after it had been vacant for more than 30 days prior to the fire. This was true even though the policy provided named perils coverage for loss to personal property caused by “fire or lightning.” The all-risk and named perils coverage were contained in two distinct sections of the policy, and it was only necessary to consider the all- risk section and the general conditions and definitions applicable to the entire policy to determine coverage since the loss was only to the structure and not to any personal property. The issue was one of first impression for this Court.

Although no Florida appellate decision has squarely addressed the issue presented in this case, other jurisdictions have addressed similar policies and found that “vandalism,” included arson in all-risk policies that did not distinguish between “fire” and “vandalism,” as is the case here. In Battishill v. Farmers Alliance Ins. Co., 2006 – NMSC – 004, 139 N.M. 24, 127 P.3d 1111, 1115 (N.M. 2006), the Supreme Court of New Mexico was asked to address a similar question with terms and policy provisions like those of the instant case. As here, in Battishill, a home, damaged by an intentionally set fire, had been vacant for more than thirty consecutive days prior to the fire, and did not contain any personal property. Id. at 1112. The policy in Battishill provided for all-risk coverage (subject to various exclusions) on the structure and named perils coverage on personal property caused by specific perils [7] such as “fire or lightning” and “vandalism or malicious mischief.” The structure coverage contained an exclusion for loss resulting from “[v]andalism and malicious mischief if the dwelling has been vacant for more than 30 consecutive days immediately before the loss.” Id. at 1114-15. Based on its determination of the common and ordinary meaning of the terms used in the exclusion provision, the Battishill court held that arson was a form of vandalism and malicious mischief. Id. at 1115. Since the court found that the exclusion was clear and unambiguous, it was unnecessary to read both the all-risk (structure) provision and the named perils (personal property) provision together, as the loss was only to the structure. The court concluded that coverage was excluded under the policy. Id. The Fifth DCA agreed with the analysis in Battishill.

Likewise, Costabile v. Metropolitan Property & Casualty Insurance Co., 193 F. Supp. 2d 465, 478 (D. Conn. 2002), held that “vandalism” was unambiguous and included “arson.” The policy in Costabile provided all-risk coverage for the structure, and did not list vandalism and fire as separate causes of loss. The personal property coverage was for named perils, including fire. Id. at 474. The court noted that “damage to the dwelling or private structures and damage to personal property are separate and distinct types of coverage contained in a single policy.” Id. The court determined that “vandalism” included “arson” based on the clear and plain meaning of the terms within the context of the distinct provisions of the policy. Id. at 476-77; see also Durrence, 872 F.2d at 379 (finding that, based on common sense interpretation of vandalism provision in vacancy exclusion, exclusion would apply to arson fire); Estes v. St. Paul Fire & Marine Ins. Co., 45 F. Supp. 2d 1227, 1229 (D. Kan. 1999) (finding that “vandalism” exclusion included arson); Potomac Ins. Co., of Ill. v. NCUA a/k/a Nat’l Credit Union Ass’n, No. 96 C 1044, 1996 U.S. Dist. LEXIS 9844, 1996 WL 396100, at *4 (N.D. Ill. July 12, 1996) (holding that ordinary meaning of “vandalism” in all-risk policy included arson); Bear River Mut. Ins. Co. v. Williams, 2006 UT App 500, 153 P. 3d 798, 801 (Utah Ct. App. 2006) (determining that vandalism and malicious mischief exclusion encompassed arson).

Here, the Policy provides all-risk coverage against direct physical loss to the structure under Coverage A, the structure provision, and named perils coverage for direct physical loss to the contents of the structure under Coverage C, a separate personal property provision. There is no reason to consider Coverage C in order to determine the meaning of Coverage A. Each are separate and distinct provisions, though common policy definitions and general conditions and provisions would control both. Although arson could be included within “fire or lightning,” these terms appear only in Coverage C, the personal property provision, not Coverage A, the structure provision. As the loss in the instant case was only to the structure and not to any personal property, it is only necessary to read Coverage A and the general conditions and definitions applicable to the entire Policy. In that context, the Court concluded that the plain and ordinary meanings of “vandalism” and “malicious mischief” include “arson.” Therefore, it need not read Coverage C to create an ambiguity when the vacancy exclusion in Coverage A is clear on its face. The Court affirmed the trial court’s final summary judgment.

 

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