January 30, 2017
This week the Texas Supreme Court reversed the ruling of the appellate court and decided that the homeowner's interpretation of their insurance policy was reasonable and that it afforded coverage for fencing that was attached to their home under the “dwelling” provision of the policy, as opposed to the “other structures” provision of their policy. The case is Nassar v. Liberty Mutual Fire Ins. Co. No. 15-0978 (Tex. Jan. 27, 2017).
The Nassars own six acres in Richmond, Texas with a dwelling, fences, barns, and outbuildings all located on the property. They procured a homeowners policy that was in effect when Hurricane Ike came through Texas in 2008 and caused significant physical loss to the insured property.
The coverage the Nassars had for their dwelling provided over $240,000 and $24,000 in coverage provided under the “other structures” provision. The “dwelling” section of the insurance policy covered the dwelling, including structures attached to the dwelling. The term structure is not defined under the policy. The insureds argued that their fence, which was attached to the Nassars home at four separate points, was to be considered “attached” to the dwelling under the insurance policy, while the insurer argued that simply connecting 4000 feet of fencing to the home at four points does not constitute attachment to the dwelling.
The court determined that the policy language was straightforward and required that structures attached to the dwelling be afforded coverage. Even though “structure” was not defined in the policy, the court will turn to the dictionary definition when a term is not defined in the policy. The dictionary defined a structure as “any construction, production, or piece of work artificially built up or composed of parts purposefully joined together.” The court took that definition into consideration and reasoned that the fencing had been artificially constructed and was “composed of parts purposefully joined together” and since it was attached to the house and not set apart from their house by a “clear space.”
Therefore, the Supreme Court of Texas determined that coverage would be provided for the property loss that occurred to the fence.
Editor's Note: This seems like a very broad interpretation of the policy language. If the Supreme Court of Texas's interpretation of the policy language is applied, and an insured attaches all of his fences, barns, and other structures on his property to his dwelling in some way, does the insured have to provide coverage for extensive losses only under the “dwelling” provision? The “clear space” provision would probably preclude coverage for a barn or other sort of structure that was separated from the home by a clear space.