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Digested from case reports published in the North Eastern Reporter 2d, West Publishing Co., St. Paul, MN

Interpretation of "vacant" or "unoccupied" determines insurer's liability for house fire

David Lundquist and his wife, Kathryn, who owned a home in Rockford, Illinois, had secured a homeowners policy from Allstate. The policy contained a provision excluding coverage when the property was vacant for more than 30 consecutive days before a fire loss. The policy did not define "vacant" or "unoccupied." The Lundquist's home was destroyed by arsonists on December 5, 1996. Allstate contended it was not liable because the home was vacant for longer than 30 days before the fire. (There had been previous vandalism damage for which Allstate had denied a claim "because nobody was living there.")

The record indicated that the insureds purchased the home in 1972 and lived there until August 1995, when they moved into a new house in Oregon, Illinois. On October 26, 1996, the insureds signed a contract to sell the Rockford house for $150,000, and the sale was to be finalized before Christmas.

The policy was effective from February 26, 1996, through February 27, 1997. In July 1996, David Lundquist told Allstate's agent, Robert Tucker, that he and his family would be moving to their new home. The policy was amended in September 1996, to show the insureds' new address.

The insureds presented affidavits showing that various members of the family stayed at the Rock ford home on several weekends from August 1995 until the fire. David Lundquist stated that he had completed some repairs and stayed overnight at least once and possibly twice in November 1996. On those occasions he had showered, shaved, and had eaten breakfast. Mrs. Lundquist said that she had visited the house weekly in order to clean, and had eaten lunch there.

At the time of the fire, various paintings, clothing, personal items, bedding, kitchen appliances and cooking utensils were in the house, as well as a fully equipped weight room in the basement.

The trial court granted Allstate's motion for summary judgment, and the insureds appealed.

In regard to the vacancy or unoccupancy exclusion, the Illinois statute requires all policies to provide for a 60-day vacancy exclusion. The insureds argued, on appeal, that the Allstate exclusion violated this statutory provision since it excluded liability after 30 days.

The higher court decided that Allstate could not provide for less coverage. Furthermore, the standard policy does not exclude fires caused by vandalism. Therefore, such fires are covered unless the building has been vacant or unoccupied for more than 60 consecutive days.

The higher court ruled that there was a genuine issue of material fact as to whether the house was vacant and unoccupied. The trial court erred in granting a summary judgment in favor of Allstate, and the action was reversed and remanded for further proceedings.

David Lundquist and Kathryn Lundquist, Appellants, v. Allstate Insurance Company-No. 2-99-0863-- Appellate Court of Illinois, Second District-June 19, 2000-Rehearing denied July 20, 2000-732 North Eastern Reporter 2d 627.

Insured's response to shove deemed intentional and thus not covered by HO policy

Jeff Presswood was in a bar in Lincoln, Illinois, when George Leverton entered, accompanied by Shannon Follis. Shannon had formerly dated Presswood, and she asked to speak to him privately in the alley. While they were outside, Leverton opened the alley door, bumping Presswood who was leaning against it and bumping him against Follis. According to Presswood, he turned quickly and swung the beer bottle (which was in his right hand) in the direction of the shove, striking Leverton in the face and severely injuring him. Presswood tendered the defense of the damage claim and subsequent suit to State Farm with whom he had a homeowners policy.

State Farm defended under a reservation of its rights and then filed this action for a declaratory judgment to determine its liability, if any, under its policy.

Its policy excluded bodily injury or property damage: (1) which is either expected or intended by an insured; or (2) to any person or property which is the result of willful and malicious acts of an insured."

In the civil action filed by Leverton against Presswood and State Farm, a jury found Presswood at fault and returned a verdict for $160,889.06. The jury also decided Leverton was at fault and reduced that verdict by 10%. Ultimately, the court reconsidered and agreed State Farm was not liable and vacated its previous order. The court then held that Presswood's actions were intentional and not accidental and, therefore, were not covered by the homeowners policy. Leverton appealed.

The court, on appeal, noted that Presswood was convicted in the criminal assault action of aggravated battery, which has been defined as "intentionally or knowingly causing great bodily harm, or permanent disability or disfigurement." Presswood testified that he swung the bottle as a reflex action in response to the shove and that he did not know it was Leverton who had pushed the door against him. The court said the evidence was insufficient to support any finding that Presswood's conduct was negligent or in self-defense.

Leverton's injuries were not the result of an accident and were not covered by the State Farm's homeowners policy. The judgment entered in the lower court in favor of State Farm was affirmed.

State Farm Fire and Casualty Company v. George G. Leverton et al., Appellants-No. 4-99-0069-Appellate Court of Illinois, Fourth District-June 26, 2000-732 North Eastern Reporter 2d 1094.

Son with own auto policy, living with parents, seeks coverage under their policy

Thomas Bettenhauser was living with his parents at the time he was seriously injured on November 22, 1995, but he was driving his own car at the time. His policy did not provide for underinsurance coverage. The other driver's policy had a $10,000 limit, and Thomas settled for that amount.

On February 1, 1996, Thomas filed a UIM claim with Worcester Insurance Company under his parents' policy, which provided for that coverage. Their policy covered the insureds and "any family member who is a resident of your household." Following that paragraph was an exclusion that stated, "We do not provide Underinsurance Motorists Coverage for 'bodily injury' sustained by any person: 1. While 'occupying' or when struck by, any motor vehicle owned by you or any family member' which is not insured for this coverage under this policy."

Worcester denied liability to Thomas under his parents' policy since he was driving his own car and his insurance policy did not provide for UIM coverage. Over the next several months, the company and Thomas negotiated. Finally Thomas demanded arbitration, and a hearing on his petition was set for March 24, 1997. Worcester then filed this action to permanently stay arbitration, based on the exclusion. It argued for the first time that no coverage existed since Thomas was driving his own car and not a car owned by his parents. The Supreme Court of New York granted the stay, concluding that the parents' policy did not cover the injuries. This appeal followed.

The Court of Appeals of New York found that Worcester waived its right to rely upon the policy exclusion by failing to deny coverage in a timely manner. In this instance, the company delayed for over a year to deny liability because of the exclusion. The Insurance Code requires insurance companies to give written notice of a disclaimer of liability or coverage as soon as possible. In the meantime, the company demanded discovery procedures and consented to his settlement with the other driver.

The judgment of the lower court was reversed and the petition to stay arbitration was dismissed.

In the Matter of Worcester Insurance Company v. Thomas Bettenhauser, Appellant-Court of Appeals of New York-June 20, 2000-- 734 North Eastern Reporter 2d 745.

Mixed decisions ensue from incorrect flood insurance quote

In 1993, Robert and Charleen Carpenter agreed to purchase a home in Proctorville, Ohio, for $64,500, provided they could secure a conventional mortgage for at least $35,000. The purchasers were to pay the balance of the purchase price in cash at the time of closing. The National City Mortgage Company granted the mortgage but required the purchasers to obtain flood insurance since the home was located in an area susceptible to flooding. The purchasers talked with Scherer-Mountain Insurance Agency about the flood insurance, and the agency quoted a yearly premium of $220 for the $75,000 coverage desired. The insurance agency told the applicants there would be a delay in the issuance of the flood policy since all applications for that coverage had to be approved by the National Flood Insurance Program (NFIP).