Like many Americans, the celebration of our nation’s independence is one of my favorite holidays. In addition to the baseball games, picnics, parades and barbeques, my extended family gets together every 4th of July in the Boston area to reunite and celebrate with as many fireworks as we can reasonably afford. In fact, my family is so wild about Independence Day that when one of my uncles passed away several years ago, he had a provision in his will creating a trust only to be used to purchase fireworks for our annual get-together. Needless to say, the first Independence Day following his passing was the greatest Healey family fireworks display yet.
Of course, my family is not alone when it comes to firework celebrations. The American Pyrotechnics Association reported that last year 234.1 million pounds of fireworks were purchased – or approximately $967 million worth. While many of us are aware of the injury statistics that go along with these controlled explosions, most don’t know that damages to your house from fireworks might not be a covered loss under your insurance policy.
Even though the original insurance was sold to protect building owners from the risk of fire, as I mentioned last year in my post, Deconstructing the All-Risk Policy, insurance companies love to cite the “increase of hazard” provision in many policies to deny fire losses caused or contributed to by fireworks.
An Alabama insurance coverage case, Alabama Farm Bureau Mutual Casualty Insurance Company v. Moore,1 evidences just that. In 1980, Billy Moore purchased a homeowners insurance policy which contained the following language:
[T]his Company shall not be liable for the loss occurring…while the hazard is increased by any means within the control or knowledge of the insured….
After Billy’s house was destroyed by a fire while Billy and his family were vacationing in Florida, the insurance company denied the claim in part because of Billy’s claim for reimbursement of $150 worth of fireworks that were stored in the house. The insurance company argued at trial that storing that amount of fireworks increased the fire hazard, relying on a Fire Marshal’s testimony that,
[Fireworks are] strictly classified as hazardous storage, and any explosive is considered highly hazardous.
Billy contended it was a small amount of fireworks and that it would take a much larger amount to significantly increase the fire hazard posed by storing them in his house. The Court ultimately agreed, reasoning that,
Farm Bureau would have us find…tha the fireworks were hazardous, whatever the quantity. Under that standard…we would also have to conclude that any quantity of shotgun shells, gasoline, or any other explosive material kept on the insured property would void a policy which contained a similar increased-hazard provision. This we are not willing to do.
While Billy ultimately prevailed, others have not been so lucky where the increased-hazard provisions were more specific. For instance, in Heron v. Phoenix Mutual Fire Insurance Company,2 the policy stated:
[The] entire policy…shall be void. . . if the hazard be increased by any means within the control or knowledge of the insured, . . . or if (any usage or custom of trade or manufacture to the contrary notwithstanding) there be kept, used or allowed on the above described premises, benzine, benzole, dynamite, ether, fireworks, gasoline, greek fire, gunpowder exceeding twenty-five pounds in quantity, naphtha, nitroglycerine, or other explosives, phosphorus, or petroleum or any of its products of greater inflammability than kerosene oil of the United States standard (which last may be used for lights and kept for sale according to law, but in quantities not exceeding five barrels, provided it be drawn and lamps filled by daylight or at a distance not less than ten feet from artificial light).
The Pennsylvania Court reasoned that because the provision specifically named fireworks, any amount of fireworks stored on the property would void the policy. It even went on to say that a less specific provision, like the one found in the Alabama case, likely would have yielded a different result.
Perhaps the best take-away from all of this though is to not leave it to chance. Enjoy the celebration of our nation’s independence – cheer your favorite baseball team to victory, savor that apple pie, and watch in awe as all those fireworks light up the sky – but please, make sure to do so responsibly. Happy 4th!
2 Heron v. Phoenix Mut. Fire Ins. Co., 180 Pa. 257 (1897)