Vacancy Exclusion In Home Owners Policies

Insurance lawyers who handle home owners claims are all aware of the “vacancy exclusion” in a home owners policy. They may vary slightly from policy to policy but almost of the policies are going to have an exclusion that excludes losses that result when a home or building is vacant for a defined period of time.
The Claims Journal published an article in July of 2015 dealing with this issue. The article speaks to a Florida case but because of similarities in Texas and Florida insurance law, the article is worth reading. Here is what the article says.
Homeowner policies contain a vacancy exclusion. Under the terms of the standard vacancy exclusion, damage caused by “vandalism and malicious mischief” are excluded from coverage. However, is arson encompassed within the phrase “vandalism and malicious mischief?” That issue was recently decided by the Florida Court of Appeals in Botee v. Southern Fidelity Ins. Co.
In Botee, it was undisputed that the insured home had been vacant for more than 30 consecutive days immediately prior to the arson-set fire. Therefore, the only issue before the Court was whether arson was encompassed within the vandalism and malicious mischief provisions of the vacancy exclusion to preclude coverage. Arson was not mentioned in the policy nor did the policy define the phrases “vandalism and malicious mischief” or “fire.” Nevertheless the Court gave those phrases their plain and ordinary meaning.
According to WEBSTER’S DICTIONARY, “vandalism” was defined as “willful or malicious destruction or defacement of public or private property” and “malicious mischief” was defined as “willful, wanton or reckless damage to or destruction of another’s property.”
The term “arson” was defined as “the willful or malicious burning of property (as a building) especially with criminal or fraudulent intent.” The Court, after reciting these dictionary definitions, noted that claimant Botee conceded that a fair argument could be made that arson was a form of vandalism. However, Botee argued that the policy was ambiguous because the vacancy exclusion did not specifically refer to arson or fire.
The Florida Court in Botee noted that most courts have held that the destruction of property by an intentionally set fire was encompassed within the term “vandalism and malicious mischief.” That Court cited American Mut. Fire Ins. Co. v. Durrence, holding that a common sense interpretation of the policy suggested that the phrase “vandalism and malicious mischief” would encompass arson and United Capital Corp. v. Travelers Indem. Co. of Illinois, that stated “Courts generally agree that the ordinary use of the word vandalism would include an arson” and Mutual Fire Ins. Co. of Calvert County v. Ackerman, where the Court held that “a reasonable lay person reading only the dwelling coverage section could infer, under the broader definition, that ‘vandalism’ included intentionally set fires.”
The Court in Botee also noted that several other courts had found that all-risk policies that did not distinguish between “fire” and “vandalism” nevertheless concluded that the concept of “vandalism” included arson. These were cites from New Mexico and Connecticut courts that ruled on this issue.
Thus the Florida Court of Appeals in Botee concluded that the concept of “vandalism and malicious mischief” included arson in all-risk policies.