Homeowners Insurance Policy Coverage

Persons with homeowners insurance policies are in a better place today than they were before January 27, 2017.  Insurance lawyers in Mason Texas, Menard, Junction, Grand Prairie, Arlington, Dallas, Fort Worth, and all over Texas need to celebrate a recent Texas Supreme Court opinion.  The opinion is styled, Nassar v. Liberty Mutual Fire Insurance Company, et al.

The Nassars’ suffered losses after Hurricane Ike hit there home and damaged various parts of their property.  Disputes arose over the value of various items damaged including the Nassars’ damaged fencing.

In addition to their residence, the Nassars’ property contains barns, outbuildings, and a system of fencing.  The system of fencing spans over 4,000 linear feet, includes a white picket fence at the northeast corner of the dwelling, an ornamental iron fence … in front of the dwelling, numerous cross fences, garden fences and pens, and a large perimeter fence constructed of 2′ x 6′ lumber with wooden posts and eight foot intervals, on which welded wire mesh is attached.

To insure their property, the Nassars elected $247,200 in coverage under the policy’s “dwelling” provision and $24,720 in coverage under the “other structures” provision.  Liberty Mutual valued the damage to the dwelling at $20,090.61 and the damage to other structures at $70,449.02.  The undisputed value of the damage to the fencing alone totaled $58,665.  Because Liberty Mutual considered the fencing an “other structure” under the policy, Liberty Mutual issued a payment to the Nassars for $20,090.61 under the “dwelling” coverage and a separate payment equal to the policy limit for “other structures” coverage to settle the Nassars’ outstanding claims.

The Nassars then sued Liberty Mutual for breach of contract and various violations of the Texas Insurance Code.

The core dispute between the Nassars and Liberty Mutual arises out of different interpretations of the tow policy provisions that separate coverage for the “dwelling” and “other structures.”

“Structure” is not defined in the policy.  The Nassars argue that, under the plain language of the policy, their fencing, which is attached to their house at four separate points, is a structure attached to the dwelling.  Liberty Mutual argues that simply connecting 4,000 feet of fencing to the dwelling by four bolts does not attach the fencing to the dwelling, and thus the fencing must be “other structure.”

This is a summary judgment case in favor of Liberty Mutual.

This 12 page opinion goes to great length in explaining its opinion.  The court starts with well settled Texas law where they have consistently instructed that Texas courts are to construe insurance policies “using ordinary rules of contract interpretation.”  When doing so, courts must determine the parties’ intent as reflected in the terms of the policy itself.  Courts must examine the entire agreement and seek to harmonize and give effect to all provisions so that none will be meaningless.  No one phrase, sentence, or section of a contract should be isolated from its setting and considered apart from the other provisions.  Unless the policy dictates otherwise, courts give words and phrases their ordinary and generally accepted meaning, reading them in context and in light of the rules of grammar and common usage.  If it is determined that only one party’s interpretation of the insurance policy is reasonable, then the policy is unambiguous and the reasonable interpretation should be adopted.  Alternatively, if the court determines that both interpretations are reasonable, then the policy is ambiguous.

This court then compared the policy language with the facts in the case and ruled in favor of the Nassars.

This case is vital reading for insurance attorneys handling homeowners cases.