Building Vacant for Over 30 Consecutive Days Provides No Coverage for Water Damage

Insured’s Claim in Hot Water for Lack of Hot Water

Oct 20, 2021

FACTS

Mr. Albert was sued by Doucet Services, LLC, for payment for remediation work performed at the rental arising from damages occurring when a pipe burst during severe cold weather on or around January 18, 2018. As part of that suit, Mr. Albert filed a third-party demand against GeoVera seeking coverage and payment under his insurance policy. GeoVera in turn filed a motion for summary judgment, claiming that coverage was excluded under the policy, as the rental had been vacant for over thirty days at the time of the damages. The trial court granted GeoVera’s motion for summary judgment, dismissing Mr. Albert’s claims against it with prejudice.

THE POLICY

The policy at issue states under Section I, subsection D, paragraph 2.h.:

If the dwelling where loss of damage occurs has been “vacant” for more than 30 consecutive days before the loss or damage, we will:
(1) Not pay for any loss or damage caused by any of the following perils, even if they are covered causes of loss:
. . . .
(d) Water damage

The policy further defines “vacant” as meaning “the dwelling lacks the necessary amenities, adequate furnishings, or utilities and services to permit occupancy of the dwelling as a residence.”

The policy unambiguously requires three things (amenities, furnishings, and utilities and services) for a home to not be vacant under its express terms. The absence of any one of those requirements would render the dwelling vacant. A plain reading of the policy further indicates that if the rental lacked any one of those three things for over thirty days prior to a loss due to water damage, GeoVera would not pay for any damages resulting from the loss.

GeoVera proved that the rental lacked two of these requirements, as the rental lacked both the amenity of hot water and adequate furnishings.

ANALYSIS

The interpretation of an insurance policy is normally a question of law. An insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion.

A moving party is entitled to summary judgment when it shows that there are no genuine issues of material fact and that it “is entitled to judgment as a matter of law. Appellate courts review summary judgments under the same criteria that govern a district court’s consideration of whether summary judgment is appropriate. In ruling on a motion for summary judgment, the judge’s role is not to evaluate the weight of the evidence or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. All doubts should be resolved in the non-moving party’s favor.

A fact is material if it potentially ensures or precludes recovery, affects a litigant’s ultimate success, or determines the outcome of the legal dispute. A genuine issue is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for a trial on that issue and summary judgment is appropriate.

While the rental did have water and electricity, Mr. Albert admitted in deposition that gas was not connected at the time of the damage. He stated that it had been without gas service for roughly ninety-eight days prior to the pipe bursting. He further stated that the water heater for the home was gas, meaning that hot water was not possible for the rental at the time of the accident in January of 2018.

The Lafayette Municipal Code Art. III, § 26-432 (2020) adopts the language of the International Plumbing Code, Chapter 6, § 607.1, which reads: “In residential occupancies, hot water shall be supplied to plumbing fixtures and equipment utilized for bathing, washing, culinary purposes, cleansing, laundry or building maintenance.” Thus, as the home lacked gas, it necessarily lacked hot water. Thus, it is clear that the rental lacked all necessary amenities to permit occupancy of the dwelling as a residence in the city of Lafayette. This fact rendered the rental as vacant under the policy at the time the damages were sustained.

Furthermore, the clear language of the policy states that a dwelling would be considered “vacant” if it lacks “adequate furnishings . . . to permit occupancy of the dwelling as a residence.” Mr. Albert testified that Lela Mouton moved out of the rental on September 30, 2017, and that it remained unoccupied until Jontelle Hersey moved in on June 1, 2018. He stated that no furnishings were in the home the date of the water damage in January of 2018, and that the home had not been furnished since Ms. Mouton moved out in September of 2017.

Since there was no furniture whatsoever in the rental for over three months at the time of the damage giving rise to the claim, it was clear to the Court of Appeal from the plain language of the policy that the lack of adequate furnishings in the rental provides a separate and additional reason why the rental was “vacant” under the terms of the insurance policy for over thirty days at the time of the damage.

The rental property had no tenant living in it, no hot water, nor any furnishings for almost 100 days prior to damage caused by the freezing pipe. Therefore, under the express terms of the policy, it is clear that the rental was vacant for over thirty days when the damage occurred and that coverage for the water damage at issue was, therefore, excluded. We can find no error in the trial court’s granting of GeoVera’s motion for summary judgment.

For the above reasons, the decision of the trial court is hereby affirmed. Costs of this appeal are hereby assessed against Mr. Albert.

ZALMA OPINION

It is amazing that this simple, clear and easy to understand provision of a policy of insurance resulted in a trial, let alone an appeal. This seems to have been a total waste of time for the insurer, the insured, and the court.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at https://www.rumble.com/zalma ; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/ podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4