Vacancy Clause In Homeowners Policy

A person in Weatherford, Mineral Wells, Aledo, and other places in Parker County who has a homeowners policy would find the following case of interest.
At one time or another a house or residence is going to be vacant for a period of time. Maybe it is when remodeling is being done, or if the property is a rental, there may be a vacancy when a tenant moves out. There may be a temporary vacancy when a house is up for sale. There can be many situations where a structure is temporarily vacant. What most people do not realize is that almost all policies have vacancy exclusions written into the policy. The insured customer discovers this only when they are making a claim and the adjuster assigned the claim determines the vacancy exclusion is applicable and denies the claim for benefits.
The Fort Worth Court of Appeals issued an opinion recently that dealt with the vacancy clause exclusion in a homeowners policy. The style of the case is, Columbia Lloyds Insurance Company v. Robert Mao and Vachana Mao.
Here are some of the facts:
Columbia Lloyds issued a Texas Dwelling Policy that named Vachana Mao as insured and covered a rental house that she owned. After a fire occurred at the dwelling, Vachana reported the loss to Columbia and Columbia denied the claim based on the vacancy clause.
Both parties to the lawsuit filed motions for summary judgment related to the vacancy clause and the trial court granted summary judgment on the issue in favor of Mao. This appeals court reversed this finding based on the following.
The policy covered rental property and a detached garage. The vacancy clause stated, “During the policy term, if an insured building is vacant for 60 consecutive days immediately before a loss, we will not be liable for a loss by the perils of fire and lightning or vandalism or malicious mischief. …”
Columbia received a phone call from Vachana reporting a fire had damaged the insured dwelling. The phone call indicated the house was vacant per the insured – that the tenant had moved out.
An adjuster assigned to the claim took photographs and determined that there were no contents in the house. He also determined the house was a total loss, that the origin of the fire was undetermined, and that the house had been vacant for more than sixty days.
Based in this information and the vacancy clause, the claim was denied.
Vachana challenged this finding and later submitted to an examination under oath. In this examination she stated all the prior tenant’s furniture had been moved out, and the insured dwelling was “completely vacant.” She said that there was a sofa, an old bed, a gas range, and a refrigerator in the detached garage but that these appliances were not “hooked up.” She explained that the house was in the process of being remodeled but that the contractor was taking a long time finishing the job and been coming in and out of the house.
In discussing the case, the court pointed out that the insurance policy did not define “vacant.” The term vacant has been defined by case law as an “entire abandonment, deprived of contents, empty, that is, without contents of substantial utility.”
The court examined the facts set out above. They also looked at a statement by the claim adjuster wherein he stated that he did not have any information that the Maos had abandoned the property. That she knew they were remodeling the home and they were trying to sell it.
Evidence that the home was in the process of being renovated and not yet complete was also important to the Court. Further evidence showed that the utilities actually were connected because the house was being shown to potential buyers approximately twice a week and that Vachana had been in the home the week before the fire.
The Court pointed out that all the above could be evidence that the house was vacant and was evidence that it was not vacant. Since a reasonable trier of fact could differ as to their conclusion, it was improper for a summary judgment to be granted to either party on that issue.
Vacancy clauses in policies are a common reason for the denial of benefits. An experienced Insurance Law Attorney has probably dealt with this issue many times. He would know ways to get the insurance company to pay on these claims. Without this experienced help, the insurance company would win.