In New London County Mutual Insurance Company v. Zachem, 145 Conn. App. 160 (2013), the Connecticut Court of Appeals was called upon, as a question of first impression, to decide if coverage existed when vandalism resulted in an explosion and fire that destroyed the property.

The defendants were the owners of real property located on Route 2 in Preston (premises). A single family house and a freestanding garage were located on the premises; the defendants maintained the house as a rental property. The plaintiff issued an insurance policy to the defendants that included coverage for the house and the garage.

The section of the insurance policy entitled ''Perils Insured Against,'' provides in relevant part: ''We insure against risk of direct loss to property described in Coverages A [Dwelling] and B [Other Structures] only if that loss is a physical loss to property.'' Following that provision is a list of exceptions to coverage, which provides in relevant part: ''[W]e do not insure loss . . . caused by . . . vandalism and malicious mischief, theft or attempted theft if the dwelling has been vacant for more than [30] consecutive days immediately before the loss'' (vandalism exception). The policy also contains the following provision related to the list of exceptions to coverage, including the vandalism exception: ''[A]ny ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered'' (ensuing loss provision). The policy does not contain definitions for the terms ''vacant'' or ''ensuing loss.''

A property loss occurred at the premises on September 11, 2008, while the insurance policy between the parties was in full effect. An unidentified intruder stole copper pipes from the house, including breaking and removing a copper propane gas line that led to a clothes dryer in the basement of the house. The basement filled with propane gas, which ultimately exploded and caused a fire that destroyed the house.

No one had resided at the house since July, 2007, although Peter Knutson periodically visited to do remodeling or maintenance work. He also stored equipment and materials related to his fencing business in the unattached garage. No one was living at the house at the time of the claimed loss, and the house was not suitable for habitation at that time. The fire marshal who investigated the fire reported that the house did not show any signs of recent occupation at the time of the gas explosion.

The defendants filed a claim for coverage of their loss with the plaintiff. The plaintiff took the position that, pursuant to the terms of the policy, it was not liable because the claimed loss was caused by vandalism or theft, and the subject premises had been vacant for more than 30 consecutive days immediately preceding the loss. The plaintiff then filed this declaratory judgment action asking the court for a ruling that it had no duty to provide coverage for the defendants' claimed loss arising from the explosion and fire.

The trial court found that the subject premises had been vacant for more than 30 consecutive days at the time of the explosion and fire and, accordingly, that the defendants' loss fell squarely within the vandalism exception in the insurance policy. The trial court also rejected the defendants' argument that the explosion and fire was an “ensuing loss” and, thus, a covered loss under the policy despite the vandalism exception and that the defendants failed to meet their burden of establishing that the policy's ensuing loss provision was applicable in the present case.

In determining whether the terms of an insurance policy are clear and unambiguous, a court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity. Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.

The Random House Webster Unabridged Dictionary defines ''vacant'' as ''having no contents; empty'' and, with regard to a dwelling specifically, as ''having no tenant and devoid of furniture, fixtures.''

Although no appellate court in Connecticut has had the opportunity to construe the term ''vacant'' in the context of an insurance policy exception to coverage, courts in other jurisdictions that have considered the very issue have applied a definition very similar to the definition applied by the trial court, and which, although not binding on a Connecticut court, are persuasive and consistent with the dictionary definitions.

The plain and ordinary meaning of vacant is that the structure is not lived in and lacks the basic amenities for human habitation.

The vandalism exception expressly provides that losses caused by vandalism or theft are not covered “if the dwelling has been vacant for more than [30] consecutive days.” The “dwelling” is described in the policy as the structure used principally for dwelling, meaning the house, including any attached structures. The defendants' garage was unattached and, thus, not part of the dwelling.

Viewed in context of the policy as a whole, the court of appeal concluded that the term “vacant” as used in the vandalism exception is susceptible to only one reading and is not ambiguous. Consistent with the intent of the parties, a vacant dwelling is one that is unoccupied and does not contain items ordinarily associated with habitation, such as furniture, fixtures or personal property. The definition of ''vacant'' applied by the trial court was therefore legally and logically correct. Having so concluded, the court of appeal concluded that the defendants' house had been vacant for more than 30 consecutive days prior to the claimed loss.

The plaintiff argued that the court correctly determined that the policy's ensuing loss provision did not apply, arguing that ''the ensuing loss provision only applies when an excluded peril sets in motion a covered peril, and the trial court determined as a factual matter that all of the damage to the dwelling was caused by the excluded peril of vandalism, malicious mischief, and theft. Since there was no second covered peril to trigger the ensuing loss provision, the court of appeal found no error with the trial court's conclusion that the defendants' claim was not entitled to coverage under the policy's ensuing loss provision.

The owners of the property, the insureds, knew that their rental dwelling had been vacant for more than a year. They did nothing to advise their insurer of the vacancy, nor seek coverage for the increased risk of loss brought about by the vacancy. Here, the “ensuing loss” argument failed because the insureds could not prove to the court that the ensuing explosion and fire were separate and apart from the vandalism and theft that allowed the house to fill with propane.

It is standard language in almost every first party property policy that there is no coverage if the insured increases the risk of loss by, among other things, allowing the property to be vacant and unoccupied. If the insureds had advised their insurer of the vacancy, they might have received coverage if they added security with burglar and fire alarms or secured fencing.

They did not.

Barry Zalma, Esq. CFE, is an insurance coverage attorney, consultant and expert witness. He recently joined FC&S as a consulting editor.

Special Reports /

Vandalism, an explosion and a vacant property

Related Stories

Recommended For You