When is a fence a “dwelling” structure for insurance coverage purposes and when is it an “other structure?”
The Texas Supreme Court, relying on disputed language in a Liberty Mutual Insurance Co. homeowners policy, found that a fence is a covered dwelling structure when it is attached to the home.
Ruling in a case brought by Elie and Rhonda Nassar whose property in Richmond, Texas, was damaged by Hurricane Ike in 2008, the Texas Supreme Court found that lower courts had erred in finding for the insurer in the dispute over coverage for damaged fencing on the Nassars’ property.
The couple had purchased a Liberty Mutual policy that contained both a “dwelling” provision and an “other structures” provision. The dwelling provision provided $247,200 in coverage and the other structures provision had a limit of $24,720 in coverage, the Court explained.
Attached to the Nassars’ home was a system of fencing that spanned more than 4,000 linear feet and was badly damaged in the hurricane. In assessing the Nassars’ property following the storm, the insurer “valued the damage to the dwelling at $20,090.61 and the damage to other structures at $70,449.02. The undisputed value of the damage to the fencing alone totaled $58,665,” the Court stated in its written opinion dated Jan. 27, 2017.
Liberty Mutual considered the fencing to be an “other structure” and paid the Nassars “$20,090.61 under the ‘dwelling’ coverage and a separate payment equal to the policy limit for ‘other structures’ coverage to settle the Nassars’ outstanding claims,” the Court wrote.
The Nassars contested, claiming that because the fence was attached to the house in multiple places, it should be covered under the dwelling provision.
The court agreed that “the Nassars’ interpretation of the policy language is reasonable and the policy is unambiguous,” and held that the fencing is covered under the dwelling provision.
The Court came to that conclusion by examining the language in both provisions.
The Liberty Mutual policy’s dwelling provision states that it includes coverage for “structures attached to the dwelling.” The other structures provision provides coverage for structures “set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line or similar connection.”
The Court found it significant that neither the word, “structure,” nor the phrase, “other structure,” were defined in the policy.
The Nassars argue that, under the plain language of these provisions, their fencing, which is attached to their house at four separate points, is a ‘structure attached to the dwelling,'” the Court wrote. Liberty Mutual, however, argued “that simply connecting 4,000 feet of fencing to the dwelling by four bolts does not attach the fencing to the dwelling.”
Nevertheless, the Court found, “the fencing was fastened to the dwelling either by being cemented to the brick and slab of the house (as the Nassars contend) or by ‘four bolts’ (as Liberty Mutual contends). Putting everything together, and giving words their ordinary meaning in light of their common usage, the Nassars’ fencing is composed of parts purposefully joined together and fastened to the dwelling by bolts or cement. Following this Court’s well-settled rules, we conclude that the Nassars’ policy interpretation is reasonable and the applicable policy language is unambiguous.”
The Court declined to rule on Liberty Mutual’s question as to “when a fence attached to a dwelling by another fence would become an ‘other structure’ under the policy.”
That question is an issue to be resolved by the trial court, the opinion stated. The Court remanded the case back to the trial court “for proceedings consistent with this opinion.”
The case is Elie Nassar and Rhonda Nassar v. Liberty Mutual Fire Insurance Company, Liberty Mutual Group, Dave Baker, Mary Hamilton, and Marcus Smith.