The “Uninsured Location” exclusion in the Owner’s Policy excludes coverage for negligent misrepresentation claims. – Assurance

United States: The “Uninsured Location” exclusion in the Owner’s Policy excludes coverage for negligent misrepresentation claims.

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The Massachusetts Court of Appeals recently ruled, based on an “uninsured place” exclusion in a home insurance policy, that an insurer was not required to defend and indemnify an insured homeowner. against a claim for misrepresentation through negligence by a third party arising from the sale of a house previously owned by the insured.

In Norfolk & Dedham Mutual Fire Insurance Company v. Norton, 100 Mass. App. Ct. 476 (2021), the Nortons (the “insureds”) sold their home in Duxbury, Massachusetts in February 2017. In 2019, the buyer filed a lawsuit alleging that the insureds had made false statements that had prompted the buyer to buy the property. Specifically, the buyer alleged that prior to the sale, policyholders stated that the house had no “water drainage problem” and that there was no “water” problem. , “infiltration” or “moisture” in the basement. The buyer further alleged that policyholders knew or reasonably should have known that these statements were false based on information that the basement had been flooded several times in the past. After the buyer’s purchase of the property, the basement flooded in January and again in March 2018, causing significant damage to the buyer’s home and personal property.

The policyholders presented the defense of the lawsuit to their owner’s insurer Norfolk & Dedham Mutual Fire Insurance Company (the “Insurer) on the basis of a policy issued in September 2017 in connection with the new policyholder house in Sandwich , Massachusetts. This policy, which was in effect when the Duxbury property was flooded in 2018, provided coverage to policyholders for third party liability “[i]a claim is made … against an “insured” for damage due to “property damage” caused by an “event”. premises “owned by an insured” “which is not an” insured site “.[t]where does he live [the
Insureds] reside ‘, which at the time of policy issue was the domicile of the policyholders at Sandwich, and not the property of Duxbury.

The insurer sought a ruling that, under the “uninsured location” exclusion, it had no obligation to defend or indemnify the policyholders against the purchaser’s claims. The Court of First Instance ruled in favor of the Insurer and the Insured persons appealed. The Massachusetts Court of Appeals confirmed. The Court held that “home insurance provides protection against” two distinct risks “:” (1) liability resulting from the condition of the insured property, and (2) liability arising from the tortious personal conduct of the insured which may occur at any location on or off the insured premises. The Court interpreted the “uninsured location” exclusion as prohibiting coverage of a separate “third party” risk – injury resulting from the premises of uninsured property – because the insurer was not given the opportunity to inspect and assess uninsured property and be compensated for this additional risk. As the Court explained: “[w]Without the possibility of inspection, the insurer cannot know the risks associated with uninsured property and cannot include them in determining the underwriting. ”

In determining whether the “uninsured location” exclusion was applicable to the purchaser’s claims against the insured, the Court resolved the controversial issues of: (i) whether the property damage claimed by the purchaser “ar[o]out of “uninsured Duxbury property; and (ii) the meaning of the words” owned by an insured “under the exclusion” uninsured location “events rather than uninsured Duxbury property, explaining that” buyers have claimed that property damage is inextricably linked to the condition of the Duxbury premises ”.

The Court also rejected the argument of the insureds that the words “belonging to an insured” in the exclusion “uninsured location” should be interpreted to mean only property owned during the period of the policy and which it could not not be interpreted as including property previously owned by the Insureds. Instead, the Court held that what mattered for the purposes of the exclusion was whether the insureds owned the Duxbury property at the time of the alleged misrepresentation.

Thus, finding that the “uninsured location” exclusion was applicable to the purchaser’s claims against the insured, the Court of Appeal upheld the order of the court of first instance granting summary judgment in favor of the insurer.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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