Fire Department Service Charge Coverage under Homeowners

We have a question about homeowners coverage for a fire department service charge. Our insureds live in rural and semi-rural areas. Town fire departments often have contracts with smaller towns, villages, or townships to provide service. We are concerned about the provision in the additional coverage that ties payment for fire department service charges to the insured's liability “assumed by contract or agreement.” In most cases, the only contract is between the local governments, and not between the individual homeowner and a government entity. Is the insured covered in this instance?

Vermont Subscriber

Yes, the insured has coverage under such circumstances so long as the property is not located within the limits of the city, municipality, etc. that furnishes the service. No formal contract is required for coverage, since an “agreement” will suffice. According to Webster's Ninth New Collegiate Dictionary, an “agreement” is “an arrangement as to a course of action.” Simply by living in his town, the insured has made an agreement to abide by the local ordinances, regulations, and arrangements for payment of services.

The insurance policy does not specify who the parties to the agreement must be. If all residents of a particular town must pay for services passed down to them for services provided by an out-of-town fire department, coverage applies.