Texas courts have ruled that insurance policies which provide coverage for vandalism, but exclude coverage for theft, also exclude any damage that is “in furtherance of theft.” Practically speaking, if a thief breaks through your interior sheetrock walls to steal the copper wires behind them, a typical insurance policy will exclude coverage completely, even for the damage to your sheetrock walls. Now, if they had been vandals instead, and had just smashed holes in your walls without stealing copper wire, your policy would likely provide coverage. As you can see, the difference is subtle, but very important.
In Certain Underwriters at Lloyds, London v. Law, 570 F.3d 574 (5th Cir. 2009), the Fifth Circuit Court of Appeals made a landmark decision regarding the “theft vs. vandalism” issue. In Law, thieves climbed onto the roof of a Houston building and destroyed exterior panels of seventeen air conditioner units so that they could steal the copper condenser coils contained in them. The salvage value of the stolen copper was less than $2,000, but the total damage to the air conditioner was approximately $2,000,000. A policy provision provided coverage for losses caused by vandalism, but excluded coverage for damages resulting from theft. The coverage provision at issue described vandalism as “willful and malicious damage to, or destruction of, the described property.”
The Fifth Circuit concluded that damages which have no purpose other than to destroy property for the sake of destruction are considered vandalism, while incidental damage conducted in furtherance of theft falls within the category of damage resulting from theft. But did the Court intend for theft and vandalism to be mutually exclusive? Absolutely not.
[W]e should not be misunderstood to say that vandalism can never occur during a theft and vice versa. These are not per se mutually exclusive. (emphasis added).
The difference between actions falling within a given policy’s theft exclusion as opposed to its vandalism coverage “indisputably turn[s] on the purpose for which the damage at issue is done.” Id. at 578. Therefore, it is important to assess the purpose behind damage prior to categorizing it as theft or vandalism. As the Fifth Circuit explained, vandalism and theft can occur concurrently.