Theft of Insured's Property Away from Primary Residence

The insured purchased a house that he wanted to rehabilitate; it was not his primary residence. Thieves broke into the unoccupied house and stole approximately $2,900 worth of tools and plumbing supplies. The insured sought coverage under his homeowners policy but the insurer denied the claim. This case is Eiben v. Grange Mutual Casualty Company, 2010 WL 1500875 (Ohio App. 8 Dist.).

Eiben bought a house that he wanted to rehabilitate; he was working there, not living there. Thieves broke in one night and stole some of his property. When he presented a claim to his insurer, Grange, the insurer denied coverage. Eiben filed a lawsuit against Grange but the trial court ruled in favor of the insurer; Eiben appealed.

The appeals court noted the policy language which stated: We cover personal property owned or used by an insured person anywhere in the world. Any person or property away from the residence premises is covered for up to 10% of the personal property coverage limit …. Eiben argued that this declaration meant he had coverage for the stolen items. The appeals court agreed, but then continued its analysis of the homeowners policy.

In a separate portion of the policy, the following language appeared in reference to the peril of theft: This peril does not apply to theft in or from a dwelling under construction or of construction material and supplies until completed and occupied; this peril does not apply away from the residence premises to theft of property while in any other dwelling or its premises owned, rented, or occupied by an insured person except while an insured person is temporarily residing there.

Eiben argued that these separate provisions of the policy were ambiguous and so, he should have coverage for the loss of property. The appeals court said that, while the insurance policy states generally in its introductory language that it covers loss to an insured anywhere in the world, it specifically excludes coverage for situations where, as here, theft of property occurs in a dwelling under construction and theft that occurs away from the home unless the insured is living there. The insured admitted at his deposition that the house where the theft occurred was under construction and unoccupied at the time of loss, so the appeals court found that the plain, unambiguous contract language of the policy excluded Eiben's claim. The court stated that it was constrained by the language of the policy and it would not create a new contract where the plain and ordinary language used in the policy is apparent from the contents of the policy. The opinion of the trial court was affirmed.

Editor's Note: This case is a reminder to insureds that the insurance policy has to be read in its entirety. While the insuring agreement may seem to cover all losses under any circumstances, a further reading of the policy could find exclusions, conditions, and definitions that will prevent coverage or limit coverage. Moreover, just because the policy language may seem contradictory to the insured, this does not mean that a court will find that the language is ambiguous.