A recent homeowners insurance lawsuit showed how insurers use the terms of their policies to deny claims for structural damage. Last month, the California Court of Appeals for the Second District ruled in a homeowners insurance lawsuit that a property owner could not file a claim on a house that had structural damage to its second story. Repairs to the structure would have cost the homeowner more than $90,000, but the insurer claims that the nature of the damage did not qualify under the policy terms.
Details of the Homeowners Insurance Lawsuit
Arthur and Helen Grebow, homeowners in the Los Angeles suburb of Tarzana, learned that their house had sustained severe decay in the steel support beams that held up the second story. When the couple filed a claim in October 2013 with their provider, Mercury Insurance Company, the company denied the claim. The couple filed the homeowners insurance lawsuit against Mercury. The homeowners insurance lawsuit alleged that the company acted in bad faith for denying their claim.
Homeowners Insurance Lawsuit Hinges on “Collapse”
The state appeals court sided with Mercury in the homeowners insurance lawsuit. Attorneys for the insurance company cited the clause in their policy that defines a home’s “collapse”. The policy defines “collapse” as a “sudden and complete breaking down or falling in or crumbling into pieces or into a heap of rubble or into a flattened mass.” Since the structural damage and eventual breakdown was neither “sudden” nor “complete”, the appeals court sustained the insurer’s denial in the Grebows’ homeowners insurance lawsuit.
Homeowners Insurance Lawsuit Denies “Imminent Danger” Claims
According to the Grebows’ policy, the definition of “collapse” does not include “a substantial impairment of the structural integrity of a structure or building, nor a condition of imminent danger of collapse of a structure or building.” The court’s homeowners insurance lawsuit decision mentioned that Mercury “had no duty, express or implied, to reimburse the Grebows for costs to prevent imminent insurable damage.” The way that many experts read the homeowners insurance lawsuit decision, the only way that the Grebows would have been able to file a valid claim is if they had waited for the structure to sustain sufficient damage.
Homeowners Insurance Lawsuit Highlights Policy Language
The Grebows allege in their homeowners insurance lawsuit that Mercury had a duty “to prevent an imminent insurance loss,” which they failed to do when they denied the claim. Justice Richard Most wrote in his homeowners insurance lawsuit decision that, although some legal precedents offered differing opinions, “the insurer has no obligation to reimburse an insured for costs to prevent an imminent insurable occurrence from occurring.”
Source: California Court of Appeals
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