Texas court finds “fence” can be a “dwelling” for insurance

When it comes to claims involving insurance contracts, some of the most important factors in whether a company will have to pay a claim is based on the definition of the terms of that insurance contract.

The Texas Supreme Court recently decided a case that found based on the terms of the contract that a fence attached to a home was considered part of the “dwelling.” This was significant because the homeowner had 4,000 linear feet of fence that was heavily damaged by Hurricane Ike in 2008. The claims adjuster found they had suffered $70,449.02 in damage to “other structures” that included the fence. The policy included a $24,720 limit for “other structures” and their damage exhausted that policy limit far below their actual losses.

The Supreme Court found that the policy lacked definitions for the terms “dwelling” and “other structures.” The policy’s dwelling provision included structures that were attached to the dwelling, and the homeowners argued this included the fence because the fence was attached to the house in four locations. The Court agreed this matched the plain meaning of the words used in the policy.

The court remanded the case back to the trial court to determine if a fence connected to another fence that was attached to a dwelling constituted an “other structure” or not. As this case demonstrates, definitions of terms in your insurance contract are very important.

If you are uncertain whether a term includes items on your property that you assume will be covered by your policy, you should request, in writing, clarification from the insurance company. In this case, the fence damage was calculated to be more than $56,000. If you have some item that presents a significant level of exposure, you should confirm that your policy would provide adequate coverage.

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