Vacancy exclusions are commonplace in many homeowner policies, and typically exclude coverage for certain types of losses if the home is vacant and/or unoccupied. Litigation involving vacancy exclusions can arise when terms in the provision are not defined and an insured claims the terms are ambiguous.
In Jarvis v. GeoVera Specialty Ins. Co., 2018 U.S. App. LEXIS 11762 (11th Cir. May 3, 2018), the insured rented a house for several years and when the tenant vacated, the insured paid a handyman about $5,000 to repair drywall, a small roof leak, and some plumbing. During this time, there were major appliances in the home, but no furniture, and nobody lived in the home. Three months after the tenant moved out, a third party intentionally set fire to the home. The insured submitted an insurance claim, and GeoVera declined to cover the loss based on the vacancy exclusion, which excluded loss due to “vandalism and malicious mischief if the dwelling had been vacant or unoccupied for more than 30 consecutive days immediately before the loss.” The insured sued, alleging that the policy provision stating that “a dwelling being constructed is not considered vacant or unoccupied” applied, excepting the loss from the vacancy exclusion. The Middle District of Florida agreed with GeoVera, finding the exception inapplicable to renovations, repairs, or refurbishments.
On appeal, the Eleventh Circuit affirmed on different grounds. The court recognized a nationwide split of authority on the issue of whether the term “dwelling being constructed” is ambiguous and should apply only to new buildings under construction or also to work on existing buildings, and expressly determined that Florida courts have not decided the issue. The court, however, declined to decide the issue, and instead determined that jurisdictions uniformly construe the term “construction” as requiring evidence of “substantial continuing activities” that alter the building’s structure. Because the improvements were “minor” in nature and did not structurally alter the home, the court affirmed the lower court’s decision that the “dwelling being constructed” provision was inapplicable.
Although the Eleventh Circuit insinuated that application of the phrase “dwelling being constructed” to work that did not involve “erecting an entirely new structure” would be a strained reading, the decision leaves open the issue of which view of “dwelling being constructed” applies in Florida.