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You Don't Know What's Covered And Excluded From Your Insurance, Not For Sure

In the Los Angeles case of Ong v. Fire Insurance Exchange, filed on April 3, 2015, the insurance company denied a claim for fire damage, because the home had been vacant for more than 60 days. A vagrant had broken in, brought in a mattress and firewood, and accidentally set fire to the house when his warming fire got out of control. The insurance company cited the vacancy exclusion in the policy, and the trial court agreed, but the Court of Appeal agreed with the homeowner that: "Here, the vacancy exclusion in Plaintiff's policy was limited to 'vandalism and malicious mischief.' Defendant could have listed fire as a risk excluded under a vacancy provision but did not do so."

During the recent measles outbreak, I discovered that the liability portion of my homeowners policy does not cover "any illness, sickness or disease transmitted intentionally or unintentionally..." Warning to parents opposed to vaccinations: if your homeowners policy is the same, and your unvaccinated child gives measles, chicken pox, or anything else to his or her classmates, and if they take it home and give it to their siblings or parents, you have no insurance coverage. Who knew?

In addition to rigorously scouring the policy for included coverages, exclusions, and exceptions to the exclusions, if the language of the policy can be construed to be ambiguous, the courts will choose the interpretation which favors the policyholder. Even if a word or phrase does not appear ambiguous on its own, if it is ambiguous in the context of the facts of your occurrence, again it will be construed in favor of coverage. It may take an attorney or private adjuster who has read some of these cases and has worked through some unusual or even unique fact situations, to imaginatively discover an ambiguity in some piece of policy language as it applies to your particular occurrence.

The Take Away: If the damage or claim is significantly greater than your deductible, always tender the claim to your insurance companies. Do not assume that it's not covered, even if it looks to you like the policy doesn't cover it.

If the insurance company rejects the claim, no matter how logical the rejection letter appears, let an experienced and knowledgeable attorney take a look at the policy. I have a blow-up of check for over $6 million from an insurance company which thought its argument that the claim was excluded, was so strong that it went to trial and lost.

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