The Definition of an “Insured” Can Have a Dramatic Impact on Your Florida Homeowners Claim

The purchase of homeowners insurance is essentially a necessity when you buy your dream home.  Whether you obtain this insurance because it is required by your lender or to protect your investment, homeowners insurance can protect you against devastating financial loss caused by wind storms, earthquakes, hurricanes, fire and other causes of property damage.  Most homeowners recognize that their policy defines an “insured” as broader than the individuals listed on the deed or title documents.  When your property is damaged because of an intentional act like vandalism, fire or theft, the parties designated as the “insured” under a homeowners policy can be critically important. 

A federal court in Pennsylvania, in the case of Ripley v. Brethren Mutual Insurance provides an example of the way this issue can impact coverage.  The insureds filed an insurance claim for a $50,000 personal property loss related to items that were stolen from their residence.  During the course of investigating the claim, the couple who owned the home, which was actually a 13 acre working horse ranch, disclosed that their grandson was involved in the burglary.  Two individuals entered the property and stole the items after the couple’s grandson intentionally unlocked the door to facilitate the intruders’ entry into the premises. 

The insurance company contended that the claim was excluded because the loss was the result of an intentional act involving an “insured” under the terms of the policy.  The insurance investigator forwarded a letter to the policyholders indicating that the claim was being denied based on the following policy language:  “We will not pay for loss or damage arising out of any act an insured commits or conspires to commit with the intent to cause a loss.  In the event of such a loss, no insured is entitled to coverage, even insureds who did not commit or conspire to commit the act causing loss.”  The policy further defined an insured to include relatives who were members of the household.

Upon having their claim denied on this basis, the policyholders filed a lawsuit against their carrier for breach of the contract and insurance bad faith.  Both the policyholders and the insurer moved for summary judgment on the issue of whether the grandson constituted an “insured” under the policy.

The court observed that determining a party is a member of the household under an insurance policy involves a fact intensive inquiry of the following: (1) the quantity of time living in the residence; (2) the parties intent; (3) kinds of activity by the party at the residence; (4) degree of self-sufficiency and age of the individual; and (5) specifics of the living situation.  Along with these factors, the court also noted that the nature of the relationship between the individual and the rest of the family unit needed to be considered.  If the individual was treated as one would anticipate a family member to be treated, this would suggest that the individual was a member of the family (or insured) for policy purposes.

In weighing these considerations, the judge ruled that the facts did not warrant summary judgment for the insurer because the couple’s interaction with their grandson “was not intimate, but rather was at arm’s length.”  The affidavit provided by the grandmother indicated that the grandson had to “pay his way (and work) to reside in the home.”  Further, the grandparents routinely rented out rooms to boarders.  The grandson did not share meals with the grandparents nor was he authorized to use the living room, dining room or any other bedroom other than the one that was assigned to him.  He also paid his own cell phone bill and health insurance.  Although he received a reduced board amount ($25 per week), he was also expected to work as a supplement to these payments.

Based on these facts, the judge concluded the grandson did not constitute an “insured” under the policy, so the court granted summary judgment to the grandparents on this basis.  This case demonstrates the impact of subtle distinctions in the way policy language is interpreted.  Many terms like an “insured” are not construed according to everyday parlance, so you should seek legal advice if you are involved in a policy dispute.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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