Interpreting Homeowners Policy

Homeowners in Grand Prairie, Dallas, Fort Worth, Arlington, Mansfield, Irving, De Soto, Duncanville, Carrollton, Coppell, and other cities throughout Texas, probably have very little understanding about their homeowners insurance policy except that it is suppose to help them rebuild their house if it burns down. In addition to that, it is also suppose to provide coverage for you as a homeowner if someone is injured on your property and then sues you for their injuries.
The United States District Court for the Western District of Texas, Austin Division, issued an opinion on September 7, 2010. The style of the case is, Liberty Mutual Fire Insurance Company v. John Trovato and O’Delle Annette Hall. This case deals with the duty of an insurance company to protect its insured under a homeowners policy when they are sued and the interpretation of the insurance contract in that regard.
Here are some facts. On August 2, 2007, Hall came from a home she owned to help Trovato clean boxes out of Trovato’s attic. While moving boxes from the attic, Hall fell through the ceiling. The fall resulted in serious injuries to Hall. Hall sued Trovato. Trovato asked Liberty Mutual Fire Insurance Company to protect him in the lawsuit filed by Trovato. Liberty refused and this lawsuit resulted when Liberty filed this declaratory judgment action to have the court determine whether or not Liberty had any duties under the homeowners policy.
This court said Liberty did not have any duties under the facts of this case and part of their reasoning was: The policy issued to Trovato provides,
Section II – Liability Coverage Coverage C (Personal Liability)
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, we will:
1. pay up to our limit of liability for the damages for which the insured is legally liable. Damages include prejudgment interest awarded against the insured; and 2. provide a defense at our expense by counsel of our choice even if the suit is groundless, false, or fraudulent.
The policy also provides the following exclusions:
Section II – Exclusions 2. Coverage C (Personal Liability) does not apply to:
e. bodily injury to you or an insured within the meaning of part a. or part b. of insured as defined.
The policy’s “Definitions” section provides:
4. “Insured” means you and residents of your household who are:
a. your relatives.
As amended by Endorsement 2934 (the “Endorsement”), to the policy “you” and “your” refer to the “named insured” shown in the Declarations and (1) the spouse of the “named insured” shown on the Declarations, if a resident of the same household; or (2) the partner in a civil union, registered domestic partnership, or similar union or partnership, with the “named insured” shown on the Declarations, if a resident of the same household.
The most relevant factor coming down in favor of Liberty in this case was that on September 6, 2006, Trovato and Hall executed and filed with the county clerk of Williamson County, Texas a “Declaration and Registration of Informal Marriage” by which Hall and Trovato swore and affirmed that they agreed to be married since March 1, 2006. Liberty maintains that based on the Marriage Declaration, and other evidence including that Hall received mail, had a car registered to and stayed at least part time at Trovato’s home, Hall was an “Insured” under the Policy as she was a spouse, partner, or relative of Trovato at the time of the accident and a resident of Trovato’s household. Therefore, Liberty contends the policy expressly excludes coverage for Hall’s damages suffered in the August 7, 2007 accident, Liberty has no duty to defend or indemnify Trovato in the lawsuit, and has no duty to pay Hall any amount she might recover against Trovato in the lawsuit against Trovato.
The court discussed the relevant areas of law and how to interpret insurance contracts and how other courts rule in these interpretations. The court dwelt on the relationship between Hall and Trovato and cited Texas Family Code, Sections 2.401 – .404, addressing proof of informal marriage.
In this case there was evidence that Hall also had another residence and the court stated, “In Texas, the controlling test of whether persons are residents of the same household at a particular time, within the meaning of the policy in question, is not solely whether they are residing together under one roof. Instead, the real test is whether the absence of the party of interest from the household of the alleged insured is intended to be permanent or only temporary, i.e., whether there is a physical absence coupled with an intent to return.” The court further stated, “The test focuses on intent of the non-insured person for whom coverage is sought: whether or not that individual intended her departure from the residence of the insured to be permanent or only temporary. If the non-insured person intends to return, such that the departure is only temporary, the person remains a covered person. Indeed a person may, and many do, have more than one residence.” In stating the above the court was citing cases from the Waco Court of Appeals and the Texarkana Court of Appeals.
This case gives a perspective on how courts will look at these types of cases.