Updated February 1, 2021

 Summary: Although fire insurance has been accepted as a routine form of protection for many generations, "fire" has never been defined in any standard insurance policy insuring against the peril of fire, or in any form or endorsement commonly used with the contract. The same is true of the many other insurance forms that refer to fire in one way or another—in an exclusion, condition, or deductible. Because insurers have not defined the policy language related to this peril, the issue of what types of fire losses are covered and what are not has been developing in court decisions since the early nineteenth century. This article offers a general discussion of the issue. Some of the cases cited in this article are old, but they are still valid law and form the basis upon which today's acceptance of coverage due to fire loss is anchored.

Topics covered:

Reasonable expectations

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A Brief History

 Most court decisions on the subject of coverage for fire losses have been based on the 1815 English case, Austin v. Drew, 4 Camp. 360. In that case, the insured was a sugar refiner. A supply of sugar located in his eight-story building was damaged by heat and smoke when one of his employees failed to open a register that was normally kept open when the fire used in the refining process was high. The court held that the damage was not covered by fire insurance because the loss was caused by the "negligent management of…machinery. The sugars were chiefly damaged by the heat; and what produced that heat? Not any fire against which the company insures, but the fire for heating the pans, which continued all the time to burn without any excess."

 Eventually, the limitations on fire coverage that this case established became known as the hostile fire doctrine. Incidentally, the labels of hostile and friendly fire made their first appearance in the 1896 American case, Way v. Abington Mut. Fire Ins. Co., 43 N.E. 1032 (Mass. 1896). In its basic form (the one that continues to be applied by the majority of courts), the doctrine provides that loss by friendly fires is not covered and that a friendly fire is one that the insured intentionally kindles and that remains in the place it was intended to be. A hostile fire is one that is either not confined to the place intended, or one not started intentionally. Some courts have expanded the idea of hostile fire to include those that they characterize as excessive, as when a thermostat or other part of a furnace malfunctions and damages either the heating device itself or some other property through extreme heat.

 Elements of Fire

 Courts have held that the term "fire," within the meaning of insurance contracts covering against this peril, involves combustion (burning) or other oxidation that is manifested in a flame or glow; and fire that is hostile.

 The requirements of flame or glow make it clear that fire insurance does not cover the gradual combination of oxygen with other substances (such as when metal rusts) or chemical reactions. Although chemical reactions may produce heat, they are not "fire" in the commonly accepted sense of the word.

 For example, in Washington State Hop Producers v. Harbor Ins. Co., 660 P.2d 768 (Wash. App. 1983), a Washington court of appeals denied fire insurance coverage for loss to hops by a process known as browning. While the hops were stored in a warehouse, chemical oxidation took place that was similar to the hops being charred. The court turned to Webster's Dictionary for this definition of fire: "the phenomenon of combustion as manifested in light, flame, and heat," and pointed out that many cases have held that "the mere showing of the emission of smoke, steam, or heat is not sufficient to establish the existence of a fire; there must be some visible indication of fire such as flame, glow or light." Actual observation of a glow is not necessary, but the process that would create a glow must have taken place. The court found that heat generated by chemical oxidation caused the damage, without any flame, glow, or light, so the loss was not caused by fire.

 Likewise, a chemical reaction resulting from overheating did not constitute "fire" in U.S. Fidelity and Guaranty Co. v. First State Bank and Trust Co., 125 F.3d 680 (8th Cir. 1997). The insured's industrial plant degreaser was left on after working hours and overheated. An employee driving by the plant noticed the lights left on and investigated. He observed a smokiness in the air and called the fire department. No open flames were discovered, and the smoke was determined to be vapor cloud containing hydrochloric acid, which damaged the plant. The appellants argued that the meaning of "fire" does not require the presence of a flame and that the presence of "light from the glow of the electrical coils' combustible materials, including cutting oil residue and paint; and oxygen, or at least an oxidizer—combined to create a fire.'" Rust appeared to be the only damage found in the plant. While the court stated an exothermic reaction had occurred, there was insufficient support that there was a fire. The court said, "Appellants failed to present evidence that a flame had been present."

 On the other hand, a federal appeals court ruled that charred soybeans were subject to the ensuing fire exception to an exclusion in Oakley v. Farmland Mut. Ins. Co., 245 F.3d 1027 (8th Cir. 2001). Some of Bruce Oakley's stored soybeans were charred and blackened when unloaded from a storage bin. Several employees saw the beans "amidst heat, smoke, and steam." They also witnessed hot spots of beans that had to cool before they could be manipulated with rods. Witnesses stated that "the hot spots glowed like charcoal and were orange." Smoke and a soy sauce odor were also present. However, no one saw flames.

 An expert testified that the beans were stored in an unaerated and moist bin where mold grew and the temperature ultimately caused autoxidation, causing the beans to burn. The court ruled that, according to the witnesses' accounts, "they observed fire: there was smoke, heat, and orange light."

 Friendly Fire

 One fairly common example of friendly fire is a boiler or other part of a heating system that, because of some malfunction, becomes overheated from the fire within it and sustains damage without the fire actually leaving the confines of the furnace. Unless the extreme heat causes a second fire to start outside of the container, damage by heat alone has traditionally not been covered as fire. See, for example, Gibbons v. German Ins. & Sav. Ins. Co., 30 Ill. App. 263 (1889). Note, however, that the traditional rule allows coverage if a neighboring building is damaged by a hostile fire or the fire produces heat that damages the insured's building without actually igniting it. This point was made in First Christian Church v. Hartford Mut. Ins. Co., 276 S.W.2d 502 (Tenn. App. 1954). As will be discussed subsequently, the narrowness of the traditional rule is slowly being eroded.

 Another type of friendly fire loss is charring or scorching of furniture or other property by cigarettes or cigarette ash. Most insurers treat these as excluded losses. One commentator notes that the size of most cigarette claims is too small to result in litigation, so there are few reported cases. Nonetheless, without an express exclusion of coverage, these situations can be costly to insurers because of the expenses of investigation and claims handling. Furthermore, one prominently cited case on the issue, Swerling v. Connecticut Fire Ins. Co., 180 A. 343 (R.I. 1935), decided by the Supreme Court of Rhode Island, held that coverage applied to a small section of a rug charred by a cigarette that had fallen from its intended place. The court determined that the originally friendly fire of the cigarette changed its nature when it left its intended place.

 Some courts have also held that property being put into the fire by mistake does not take the loss out of the friendly fire class. Cases taking this position include: Weiner v. St. Paul Fire and Marine Ins. Co., 207 N.Y.S. 279 (1924); Harter v. Phoenix Ins. Co., 241 N.W. 196 (Mi. 1932);  Mode, Ltd. v. Fireman's Fund Ins. Co., 110 P.2d 840 (Idaho 1941); Youse v. Employers Fire Ins. Co., 238 P.2d 472 (Kan. 1951); and Ownens v. Milwaukee Ins. Co., 123 N.E.2d 645 (Ind. App. 1955). These cases hold that the loss is within the insured's intention to burn everything that is in the otherwise beneficial and controlled fire.

 A Louisiana court of appeals disagreed in Salmon v. Concordia Fire Ins. Co., 161 So. 340 (La. App. 1935). The case involved the loss of a bracelet that was mistakenly thrown into a trash fire. The court held that the policy did not make any distinction between friendly and unfriendly fires, and since the loss was the direct result of fire, coverage applied. This appears to be the only reported case to have taken this view.

 That the insured is penalized for his own, or someone else's, mistake in these cases makes the friendly fire concept seem arbitrary. Damage results directly from fire that is not intended to come into contact with the particular property involved. Furthermore, mistakes by insureds generally do not affect property insurance. For example, insureds who intentionally start up their inherently dangerous motor vehicles and drive on public roads may still recover for damage to their vehicles (if they have bought physical damage coverage), even when their mistake in operating the vehicle causes an accident.

 Excessive Fire

 Perhaps the friendly fire doctrine has retained its popularity in the courts because its simplicity leads to predictable coverage results. The spatial standard of the traditional friendly fire doctrine concerns itself only with whether the fire has escaped from its intended physical location. When a fire that has caused damage to its container does not actually escape from the container, the traditional rule is to disallow coverage. Not all courts have found the traditional analysis satisfactory, however, and there have been several decisions that have broadened the scope of a hostile fire to include excessive fires.

 To understand the development of case law in this area, it is helpful to begin with cases based on the traditional rule. The case of First Christian Church v. Hartford Mutual Ins. Co., cited previously, is an example of a furnace destroyed by a friendly fire. The church's coal-burning furnace became too hot one night and the water in the boiler evaporated. The boiler melted and the heat also damaged some other items of property. The Tennessee appeals court cited extensive authority for its position that the damage was not insured because the fire had remained within the furnace.

 Going a little further, an Ohio appellate decision, Frings v. Farm Bureau Mut. Fire Ins. Co., 133 N.E.2d 407 (Ohio App. 1955), made a distinction between different parts of the furnace and found that coverage applied when the lower tubes of the boiler melted and fire under the boiler entered and burned in the water compartment. The court reasoned that once the fire entered the water compartment it became a hostile fire and damage to the boiler was therefore covered. The court cited a similar holding in an earlier Texas case, Progress Laundry & Cleaning Co. v. Reciprocal Exchange, 109 S.W.2d 226 (Tex. Civ. App. 1937).

 There has been a slow development of case law wherein the courts have reasoned that a fire could also be considered hostile if it became excessive. The first case to deviate from the rule established in Austin v. Drew was Connor v. Queen Ins. Co., 122 N.W. 1038 (Wis. 1909), in which the court found that a furnace fire that generated excessive heat and smoke was held to be a hostile fire even though there was no ignition outside of the furnace. This view gained scholarly support in a 1927 article by Professor William R. Vance, but courts did not rush to embrace it. Minnesota, however, has taken and maintained a liberal stance on the question of friendly fires. Fiorito v. California Ins. Co., 114 N.W.2d 661 (Minn. 1962), followed the holding in the earlier decision of L.L. Freeberg Pie Co. v. St. Paul Mut. Ins. Co., 100 N.W.2d 753 (Minn. 1960), that excessive heat makes a fire hostile. In Fiorito, a defective thermostat on a gas-burning furnace caused the furnace to overheat and melt. As in many cases involving damage confined primarily to furnaces, a greater disaster was averted only because someone was on hand to observe a problem and turn off the furnace. The court, in holding that the damage to the furnace was caused by an excessive—and therefore hostile—fire, stated: "When the nature of present-day heating devices and equipment is borne in mind, it does not seem warranted to encumber court-made doctrine originally announced in Austin v. Drew…with the requirement that there must be some actual ignition or some burning outside the heating device, even though an excessive fire destroys the device itself. An excessive or uncontrolled fire, sufficient to melt parts of the furnace, surely is included in the intended meaning of the words loss or damage by fire.'"

 The Temporal Standard

 In 1961, commenting on the development of cases accepting the excessive fire idea, a law review article presented the argument that another standard for finding a fire hostile, besides the spatial standard, could be a temporal standard. The article stated:

 The insured expects or intends a fire to burn for a certain length of time and then cease, for example, where it is expected that a fuel pump will shut off at a certain hour, or that a thermostatic control will stop the process of combustion when the heat has reached a specified temperature. It would seem that the intention of the insured in such cases (that the process of combustion should be contained within these temporal relationships) is just as clear, definite and determinable as in the case of the spatial relationship. If, for reasons beyond the control of the insured, the process of combustion extends beyond the time controls set for it, and damage by fire results, the insured should be permitted to recover for his loss under his fire insurance policy…The loss would simply be one resulting from an unexpected, unintended and unanticipated fire, burning when (rather than where) a fire was not expected to be burning.

 Several court decisions have applied the temporal standard, and reference to it can help in understanding the development of a line of cases that have taken a step beyond those involving damage to a furnace. Where the furnace or boiler are damaged by excessive heat, some part of the damaged property is in contact with the fire. The connection between the continuous flame of the fire and the resulting damage is apparent. Barcalo Manufacturing Co. v. Firemen's Mut. Ins. Co., 263 N.Y.S.2d 807 (1965), is an often-cited case that found coverage where the furnace itself remained unharmed, but other property was damaged strictly by the effects of heat. The insured manufactured hand tools that had to be annealed for a given length of time at a specific temperature. The automatic furnace controls were set at the required temperature but, due to some unexplained failure of the controls, the furnace continued to operate and became white hot, destroying the tools. The court, citing earlier authority (including the Minnesota decisions), held that the loss was caused by hostile fire.

 Although this decision, and cases following it, may seem like a significant departure from earlier case law on hostile fire, it is not inconsistent with the majority view that once a fire is considered hostile, all damage related to the fire, even if from heat and not from flame, is covered by the insurance.

 In Engel v. Redwood County Farmers Mut. Ins. Co., 281 N.W.2d 331 (Minn. 1979), the Supreme Court of Minnesota followed its earlier decisions by extending the concept of excessive fire to a case involving the loss of fifteen sows killed when a defective thermostat failed to shut off the furnace connected to the hog barn. The temperature in the barn, normally 75 degrees, rose to 120 degrees as a result of the malfunctioning thermostat; the heat depleted the oxygen supply, and the sows died from lack of oxygen. The court found that "[a] fire which causes damage by burning for a greater length of time than intended is no less uncontrolled merely because it continues to burn at its usual rate."

 The temporal standard was also applied by an Illinois appellate court in Schulze and Burch Biscuit Co. v. American Protection Ins. Co., 421 N.E.2d 331 (Ill. App. 1981). As in the earlier Barcalo case, the insured was a baking company and the loss involved damage of approximately $150,000 to an oven when it operated without any product to absorb the heat. The oven had been inadvertently left on at the end of the work shift. The court held that in the absence of a specific exclusion, "any unanticipated loss or damage caused by fire emanating from such a vessel should be indemnified" under a fire policy.

 Reasonable Expectations

 A number of the cases discussed in this article referred obliquely to the issue of preserving the insured's expectations of coverage, such as the Engel and Schulze decisions reviewed earlier.

 Despite such references to the insureds' expectations, all but the Schulze court accepted the friendly versus hostile fire doctrine, even when extending or modifying the traditionally narrow analysis. The court in Schulze departed from this tradition and said: "Without express provision, it is our view that it is improper to allow liability to turn on the location of the fire causing damage apart from the damage itself. When one purchases standard fire insurance he does so with the idea in mind of protecting himself and his property from loss or damage. Our decision conserves that expectation."

 A later decision by a Delaware appeals court stated even more forcefully that the friendly versus hostile fire analysis should be abandoned. The case, Sadlowski v. Liberty Mut. Ins. Co., 487 A.2d 1146 (Del. Super. 1984), held that the issue of coverage should be decided based on the insureds' reasonable expectations, not upon the doctrine of friendly versus hostile fire. In this case, the thermostat on the insureds' gas-fired furnace malfunctioned and the insureds alleged that excessive heat damaged their home and furnishings. The insurer moved for summary judgment, which the court refused to grant. In refusing to grant the motion, the court determined that it should adopt the analysis of the "reasonable expectations of the purchaser," and since there was insufficient evidence to determine the insureds' expectations at the time of purchase, summary judgment was inappropriate. The case was sent back for trial to determine the insureds' expectations of coverage at the time the insurance was purchased.

 The doctrine of reasonable expectations (see Reasonable Expectations) applies in some jurisdictions when the insured's expectations of coverage are objectively reasonable and may apply even when an explicit exclusion is part of the policy. However, certain jurisdictions confuse the doctrine of reasonable expectations with that of contra proferentem (under which ambiguities are interpreted in the light most favorable to the insured). The Sadlowski court, finding that the meaning of "direct loss caused by fire" was ambiguous, stated that it was adopting the doctrine of reasonable expectations, whereas an application of contra proferentem would appear to have been more appropriate. Because the Sadlowskis' property was arguably injured by an excessive (i.e., hostile) fire, adherence to the developing hostile fire doctrine would in no way have put them at a disadvantage. The danger inherent in basing decisions on the reasonable expectations of an insured is that such expectations may expand with hindsight.

 Although the doctrine of reasonable expectations may apply even when the policy contains an exclusion, the absence of any explicit limitation or exclusion seems to invite an increasing reliance on this doctrine and an abandonment of traditional rules of interpretation.

9/26/13

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