Court Rules Policy Vacancy Provision Justifies Denial Despite Lack of Connection to Loss

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

After purchasing an insurance policy, an insured should carefully understand all of the terms, conditions and exclusions.  When policyholders submit a claim that is denied by their insurer, familiarity with potential grounds for denying coverage is important.  Sometimes the insurer will rely on policy language that has essentially no relationship to the actual peril that causes loss.  This disconnect between logic and language is why policyholders need an experienced Florida coverage attorney to fight an insurance claim dispute. 

A recent insurance case from Texas, Greene v. Farmers Insurance Exchange, provides an example of the way policy language can deprive a homeowner of financial protection based on language that would seem remote from the cause of loss.  Like many homeowner policies in Florida, the policy at issue in Green had a vacancy provision.  This provision like those in many Florida homeowners’ insurance policies suspended coverage sixty days after a property was vacant.  Vacancy provisions like this are routine in many policies because occupancy reduces the risk of vandalism or burglary while facilitating the ability of the homeowner to deal with potential hazards when they arise to mitigate any damage.

In Green, fire from a neighboring residence spread to the insured’s home, which had been vacant for several months.  The Farmers insurance policy in place suspended coverage if the home was left vacant for a sixty day period.  Vacancy was defined similar to the way it is in Florida policies.  The property was considered vacant if no one was residing in the property, or the personal property inside the dwelling was removed, making the home appear empty.  The rationale for such a provision is that an obviously unoccupied home is an attractive target for vandals, thieves, squatters and others who might be prone to cause property damage.

After the insurance company denied the claim and the policyholder filed a breach of contract claim, the trial court ruled in favor of the homeowner based on the policyholder’s contention that the vacancy exclusion had no relationship to the fire damage.  Farmers appealed the decision in favor of the homeowner.  The appellate court ruled that the vacancy provision had to be applied as written regardless of its lack of connection to the loss suffered by the insured.

The state’s highest court construed the vacancy provision to address the scope of coverage rather than to serve as an exclusion of coverage.  According to the court’s reasoning, the provision did not stake out an exception to coverage but actually extended coverage for sixty days beyond the homeowner leaving the property.  Based on this analysis, the court found that the vacancy clause justified denial of coverage.

An important issue that seemed to influence the court is that the insurer offered an endorsement that would have allowed the policyholder to extend the vacancy coverage.  Because this extra coverage was available, the court apparently assumed the policyholder chose to take the risk of forgoing this extra coverage.  The Green case demonstrates the importance of understanding what types of issues might preclude coverage and considering endorsements to cover additional perils that might be relevant to your situation.  This adverse result could probably have been avoided for a nominal additional premium amount to obtain vacancy coverage.

If you have insurance coverage questions or your insurance company refuses to pay your homeowner’s claim, we might be able to help.  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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