CALIFORNIA LAW NOW MAKES IT CLEAR THAT IF AN INSURANCE COMPANY WANTS TO EXCLUDE FIRE AND/OR ARSON THAT OCCURS WHEN THE STRUCTURE IS VACANT IT MUST SPECIFICALLY EXCLUDE THOSE RISKS IN THE INSURANCE POLICY
In Ong v. Fire Ins. Exchange, (2105) 235 Cal. App. 4th 901, Second District Court of Appeals finds that a vacancy exclusion in a fire insurance policy for a loss from vandalism or malicious mischief was limited to vandalism and malicious mischief. If the insurance company wanted to include fire or arson as a form of vandalism or malicious mischief it could have listed fire or arson as an excluded risk under the vandalism vacancy exclusion. By not listing fire or arson as a form of vandalism and or malicious mischief there was coverage for the loss under the fire coverage of the policy.
The Appellate Court’s reasoning was focused on the insurance company’s ability to include fire or arson as risks that could have been specifically included under the definition of vandalism and/or malicious mischief. Many policies specifically exclude damages caused by thief, sprinkler leakage, glass breakage, and water damage under the vacancy exclusion contained under the vandalism coverage in the fire insurance policy. If the insurance company wanted to exclude fire and/or arson as a risk occurring during the period of vacancy it should have specifically identified those risks in the insurance policy.
The Appellate determined that the vacancy exclusion contained in the vandalism coverage was ambiguous as it pertained to fire and arson as a risk that was excluded. “As drafter of the policy, the insurer is responsible for any ambiguity therein.” (See Crosky et al., Cal. Practice Guide: Insurance Litigation, supra, ¶ 4:407, p. 4-70)