Interpreting Your Policy

Fort Worth insurance lawyers and those in Crowley, Benbrook, Bedford, Euless, Hurst, Grapevine, and other parts of Tarrant County need to know how the courts interpret insurance policies.
The Dallas Court of Appeals issued an opinion in the case styled, Farmers Insurance Exchange v. Bob Greene. The opinion was issued on August of 2012.
Here is some background:
Farmers issued a homeowner’s policy to Greene. Section IA of the policy provides coverage for damages to the “dwelling.” defined as the residence premises reflected on the declarations page. Section IB provides coverage for damage to personal property. Section II provides liability coverage that includes coverage for personal liability and medical payments to others. The Policy also contains a vacancy provision which suspends coverage for damage to the dwelling under Section 1A sixty days after the dwelling becomes vacant.
In July 2007, four months prior to the loss at issue, Green notified Farmers that she was moving to a retirement community and placing her house on the market for sale. In November 2007, a fire spread from neighboring property to Greens’s property, causing her to suffer a loss. Greene made a claim under the Policy for damages to her dwelling. Relying on the vacancy provision, Farmers denied the claim.
A loss suit under several theories of law resulted.
Farmers filed a motion for summary judgement on all of the claims. This writing deals with the part addressing Texas Insurance Code, Section 862.054. Farmers contended that this provision of the Code was misinterpreted by the trial court.
The court began it’s analysis with an examination of the Policy. The vacancy clause at issue provided:
“If the insured moves from the dwelling and a substantial part of the personal property is removed from that dwelling, the dwelling will be considered vacant. Coverage that applies under Coverage A (Dwelling) will be suspended effective 60 days after the dwelling becomes vacant. This coverage will remain suspended during such vacancy.”
This appeals court stated that the Policy language clearly and unambiguously provided that vacancy suspends certain coverage for sixty days. The vacancy clause did not provide a forfeiture of coverage; it suspends coverage under section 1A, while other coverage under the Policy remains in effect. Thus, the vacancy clause functions as an exclusion; it excepts a specific condition (vacancy) from coverage.
The statute provides for suspension of “personal property” and says it “does no render the policy or contract void.”
The court went on to say that their inquiry in the present case does not depend upon whether the statutory language pertains only to fire insurance on personal property or to all types of property covered by fire insurance. Regardless of the type of coverage to which the statute may apply, the statute clearly requires a “breach or violation” of a “warranty, condition, or provision.” Thus describing the vacancy exclusion in terms of a breach or violation is a nonsequitor. Therefore, under the facts in the present case, the statute does not apply.
The court said that the vacancy of the home involved an increased risk that Farmers did not bargain for and expressly excluded from coverage. The reason for vacancy exclusions in fire insurance policies is obvious: empty buildings without occupants or activities pose increased fire risks.
This case serves as yet another example showing why a person needs to be aware of the wording in their insurance contract. Sure enough, when a loss occurs, the loss will be one that is not covered or explicitly excluded in the policy. Of course, there are often ways around much of the wording in these insurance contracts and the reason why a person needs to have the involvement of an experienced Insurance Law Attorney.