Fire Damage Highlights Need for Comprehensive Insurance

On January 21, 2021, the Iowa Court of Appeals affirmed a trial decision ruling that an insurance company did not have a duty to defend its policy holder against claims for fire damage. Specifically, the court affirmed that the insured did not prove that the fire occurred on land covered under the insurance policy and that the insured did not preserve the issue of whether the location where the fire occurred qualified for coverage under a “vacant land” provision in the policy.

The insured owned two adjoining parcels of land outside of town separated by a road. The insured lived on one forty-acre parcel and rented out the other parcel. The tenants on the rental property used a building to store tools and equipment. The insured kept a woodpile approximately 100 feet from the building the tenants used. The woodpile had been smoldering since December 2017.

In April 2018, the burning woodpile caused the tenants’ building to start on fire. The tenants brought a lawsuit against the insured for the damages incurred by the fire, claiming that the insured did not exercise ordinary and reasonable care in controlling the woodpile.

The insured had a farm insurance policy for the land on which they lived. The policy covered the insured’s house, outbuildings, and farm personal property. The insured did not have an insurance policy for the tenants’ land. The insurance company initially defended the insured, but later filed a motion for summary judgment claiming that the second parcel of land rented by the tenants was not covered by the insurance policy.

At trial, the district court found that the fire did not occur on any part of the insured property and that the insurance company did not have a duty to defend the insured. The insured appealed, arguing that the woodpile was on insured property, that the insurance policy covered the fire damage, and that the insurance company did have a duty to defend them.

Insurance Policy Liability Protection

The insured claimed that the woodpile was covered by the insurance policy under the “vacant land” definition of insured premises. The insurance policy stated that the insured premises included a “vacant land (other than land held for development), owned by, rented to, or used by an insured, including land where a residence or farm structure is being built for the use of an insured….” Therefore, the insured claimed that the fire did start on the insured premises and that the fire damage was covered under the insurance policy.

The district court considered the “exclusions” section of the insurance policy, which excluded liability protection for damage arising out of land “that is not an insured premises.” In excluding the woodpile and tenants’ building from coverage, the trial court had stated that the insured did not point to any policy provision suggesting that the second parcel of land should be considered insured. The court affirmed the trial court’s ruling on this point and also held that the insured had not preserved for review the question of whether the property was covered by the "vacant land" provision in the policy.