“THE LEGAL CORNER”
By Sam A. Moak
Homeowners’ Insurance: The Devil Resides in the Details
The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.
Reading and understanding all of the language in a homeowner’s insurance policy are not formalities to be skipped over while searching for the signature line. As with any contract, the fine print can have real and lasting consequences, and its contents will control over any contradictory verbal assurances. Taking the time to understand the terms of their policies might have headed off bad outcomes for homeowners in two recent cases.
Joan bought property consisting of a home, two barns, and other outbuildings. She also purchased a homeowners’ insurance policy that excluded coverage for any nondwelling structure that was rented out “unless used solely as a private garage.” Joan rented the barns to a commercial marina, which used them for storage of customers’ boats. When one of the barns collapsed due to a storm, Joan submitted a claim for loss of the barn.
The insurer denied coverage, prompting Joan to point out that the rental exclusion should not apply because the marina was using the barn as a “private garage.” Her point made sense as far as it went, but the insurer won because of a separate exclusion from coverage for any nondwelling “used in whole or in part for business purposes.” Joan’s main occupation was a financial analyst, and she brought in only a few thousand dollars by renting out the barn. But all that was necessary for the business purposes exclusion to apply was that the insured regularly engage in the conduct with an intent to profit.
It was significant for the court that, by failing to disclose her conduct, Joan had prevented the insurer from knowing the risks it was insuring. The purpose of a business pursuits exclusion, after all, is to rule out coverage for a whole set of risks and liabilities flowing from business activity. It did not matter that the damage to the barn was not caused by the boats that were stored there for profit.
At the heart of another dispute over homeowners’ insurance coverage was what turned out to be an erroneous assumption by the homeowners that “residents of your household” meant any persons living on the same parcel of land, even if in a different house. In this case Ken and June lived in a home. Their daughter, son-in-law and 10-year-old grandson lived rent-free in another house that was only 20 feet away and had the same mailing address. The close-knit family often shared meals and activities, and Ken and June regularly cared for their grandson.
When the grandson accidently shot a playmate with a rifle, Ken and June submitted a claim under their homeowners’ policy, which covered “residents of your household who are your relatives.” The insurance company succeeded in arguing that it had no obligation to defend the grandson in a suit for his friend’s injuries because he was not a resident of Ken’s and June’s household.
In legal terminology, a “household” is a collection of persons living together as a unit under one roof or within a single “curtilage.” “Curtilage” is a technical term for the area next to a house that is inside the same enclosure, is used for the intimate activities of the house, and is protected from observation by passers-by. The house where the grandson lived did not meet any of these criteria so as to make the grandson part of Ken’s and June’s “household.” The four individuals in this case probably constituted a household in many respects and for many purposes, but not in the context of interpreting the homeowner’s insurance policy.
When entering a contract, particularly one prepared or furnished by another, it is a good idea to review the document carefully. A better practice would be to have your attorney review the document for you. Do not put yourself in the position of reviewing your contract after a problem or claim has arisen. It may be too late.
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.
www.moakandmoak.com
Read MoreSad, Sad Day in Happy Valley
“THE LEGAL CORNER”
By Sam A. Moak
Sad, Sad Day in Happy Valley
The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstance.
Most of you are aware of the very sad situation in Happy Valley, Pennsylvania. However, perhaps some of you have not read the paper, seen the 6 or 10 o’clock news, read the social media posts or have simply been under a rock, so this may be your first knowledge of the events. Gerald “Jerry” Sandusky, a former assistant coach at Penn State University, was indicted for sexually abusing young boys. As a result of the indictment, the university has dismissed its president, Graham Spainer, head coach, Joe Paterno, and athletic director, Tim Curley.
Most disturbing about this entire tragedy is that 8 young boys are the victims. However, because of the pedestal Joe Paterno was placed on by Penn State fans, the fact that he has been fired garnered the most reaction.
Sandusky created a charity, The Second Mile, as a group foster home for underprivileged children. It now appears Sandusky used this charity to gain access to young boys. While his acts with these victims are terrible, it is equally horrifying that a graduate assistant at Penn State University actually witnessed one “incident” in the Penn State athletic showers in 2002. The assistant reported it to his athletic director (Curley) and coach (Paterno). However, only now 9 years later, has Sandusky been indicted. Yet the assistant is now the wide receiver coach at Penn State University. By all appearances it seems the reputation of Penn State University’s football program and head coach out weighed the crime committed against this poor young victim.
Unfortunately, those adults who should have risen up to protect this young victim failed to do so. Sexual abuse is a terrible crime that unfortunately is part of our society. I am not familiar with Pennsylvania law, but really don’t need to be. I know that if I witnessed a child being sexually abused, I have a duty to report that. I can not imagine stopping my outcry until something was done to protect that child.
Anyone having cause to believe that a child’s physical or mental health or welfare has been or may be adversely affected by abuse or neglect MUST report the case immediately to a state or local law enforcement agency or the Texas Department of Family and Protective Services. Additionally, Texas Law requires that professionals such as teachers, doctors, nurses, or child daycare workers must make a verbal report within 48 hours. Failure to report suspected child abuse or neglect is a misdemeanor punishable by imprisonment of up to 180 days and/or a fine up to $2,000. Reporting suspected child abuse to your principal, school counselor or superintendent will NOT satisfy your obligation under this law. Local school district policy cannot conflict with or supercede the state law requiring you to report child abuse to a law enforcement agency.
I hope that you are never a witness to such a horrible crime, but if you find yourself in that position, or even if you suspect abuse or neglect, you must take action. I read in an article earlier this week, “bad things happen when good men fail to take action.” Failing to act, failing to protect those who cannot protect themselves is a furtherance of the crime.
If you can, go to http://www.wltx.com/news/pdf/Sandusky-Grand-Jury-Presentment.pdf for a copy of the full indictment. I will warn you the acts are egregious and described in detail. It is not for the faint of heart. Gerald “Jerry ” Sandusky will answer for his crimes. It is only fitting those who failed to act should pay for their inaction, no matter who they are or what the program.
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.
Read More