In a recent case,1 a federal appeals court addressed the issue of whether fire damage to a vacant dwelling from an arsonist was considered distinct from vandalism, so as to not implicate an exclusion within a homeowners insurance policy. In that case, Wells Fargo Bank owned an insurance policy on an abandoned house that an arsonist set ablaze. The insured sued its insurer after the insurer refused to indemnify the insured for the loss, relying on a policy provision exclusion for damage caused by “vandalism or malicious mischief” after the property had been vacant for more than thirty consecutive days.
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I recently came across an interesting opinion, Fuller v. Mercury Insurance Company of Georgia,1 where the Eleventh Circuit Court of Appeals discussed the effect of a guilty plea on a policyholder’s civil action against their insurance carrier. The opinion stemmed from a residential fire loss and the insured’s subsequent claim for benefits under her homeowner’s insurance policy.
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In Texas, unlike some states, courts assign a minor role to public policy when interpreting insurance policies. A good example is the treatment of an arsonist’s innocent spouse. As has been described earlier, the “arson defense” permits a carrier to avoid payment upon a showing that the policyholder intentionally created a loss.1 But what about the arsonist’s spouse?
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Going way back to the roots of insurance, fire was the peril that insurance was designed to protect. Fire damage and smoke are incredibly damaging and cause many injuries and fatalities. While our suppression efforts have a come a long way, there is still a long way for us to go with fire insurance claims being properly paid across the board.


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How many of you have been faced with a fire claim where the insurer denies coverage on the grounds that the fire was the result of vandalism and therefore the claim was excluded?

Well, a recent California Court of Appeal decision has held that insurers taking this position have to actually prove that the person who set the fire intended to destroy or otherwise damage the property in order for the exclusion to apply.


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Motions in limine are commonly used to seek a pre-trial ruling regarding excluding inadmissible or prejudicial evidence. At the federal level, Federal Rules of Evidence (“FRE”) 103(d) and 104(c),1 402,2 403,3 and 611(a)4 and Federal Rule of Civil Procedure (“FRCP”) 16(c)5 provide the underlying bases for in limine motions, though the power to rule on such motions inheres in the district court’s authority to manage the course of trials.6 Whether to grant or to deny a motion in limine falls within the broad discretion of the district court.7

The admissibility of evidence of an insured’s prior fires and prior insurance claims was the subject of a motion in limine in Chicago Import, Inc. v. American States Insurance Company,8 a case arising out of a 2007 warehouse fire alleged to have been an act of arson.


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As a child of the 80s, I remember all the television commercials constantly reminding me “reading is fundamental,” and my English teachers testing me to see if I understood how a word or phrase in one part of a book was important to another section of a book. Little did I know, those commercials and my English teachers were teaching me an important lesson about reading an insurance policy.

One of the first things we should do after a loss is carefully read the insurance policy for coverage. You not only want to just read the policy sections that pertain to losses and exclusions; but also read the definitions of the terms, see where else and how else a term may be used within the policy.
 


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Recently, a defense attorney in a case I’m working on attempted to inject elements of “The Arson Defense” into the lawsuit. Only problem is, we are not claiming fire damage. However, that got me thinking about the various defenses insurance companies typically use to avoid paying insurance claims. Today, I will discuss “The Arson Defense.”

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