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First Circuit Rules on Scope of Uninsured Location Exclusion in Homeowner’s Policy

Insurance Coverage Alert | October 10, 2013
By: Karen Mariscal

In Vermont Mutual Insurance Co. v. Zamsky, No. 13-1172 (Oct. 9, 2013), the United States Court of Appeals for the First Circuit held that the exclusion in the homeowner’s policy for injuries arising out of a premises owned by an insured but not itself an insured location did not apply to injuries stemming from an accident with a fire pit on an uninsured property. 

The facts were undisputed.  On November 27, 2008, the insured, Andrew Zamsky, and several of his friends drove to his parents’ house in Falmouth, MA for a party.  The parent’s house was not an insured location under the policy.  Zamsky retrieved from a shed on the property a portable fire pit and tried to start a fire, but the wood was wet.  One of the people at the party then poured a container of gasoline on the fire, which set at least three of the assembled persons aflame.  One of the individuals suffered especially severe burns, and sued Zamsky for bodily injuries in MA state court.

Vermont Mutual filed a declaratory judgment action in federal court.  The District Court held that the Uninsured Location exclusion (UL exclusion) did not apply, and the First Circuit affirmed.  The First Circuit explained that although the MA Supreme Judicial Court has not yet ruled on this issue, there are two decisions of the Massachusetts Court of Appeals that are instructive.  The first is Callahan v. Quincy Mutual Fire Insurance Co., 736 N.E.2d 857 (Mass. App. Ct. 2000). There, an insured's dog had bitten someone at premises owned by the insured but not covered by Quincy Mutual. The victim sued the insured for personal injuries. In the ensuing coverage dispute, the court held that the UL exclusion in Quincy Mutual's policy did not pertain because the dog "was not a condition of the . . . premises." Id. at 859. Thus, while the occurrence "happened [at the uninsured location], . . . it did not 'arise out of'" the premises.          

The second case is Commerce Insurance Co. v. Theodore, 841 N.E.2d 281 (Mass. App. Ct. 2006). There, a third party entered premises owned by the insured but not covered by Commerce in order to minister to a dying tree.  Due to the insured's alleged negligence, the third party fell from a ladder and sustained injuries. He subsequently brought suit against the insured. In the ensuing coverage dispute, the court held that the UL exclusion in Commerce's policy applied. It reasoned that "where . . . a third person is on the property to repair a condition of the property . . . [t]here is a sufficiently close relationship between the injury and the premises" such that the injury should be understood to have arisen out of the premises. Id. at 285. (internal quotation marks omitted).

The First Circuit stated that in both of these cases, the Massachusetts Court of Appeals interpreted the UL exclusion's ambiguous "arising out of a premises" language to mean arising out of a condition of a premises. Read together, the cases establish a dichotomy: if the covered occurrence arises out of a condition of the premises and the exclusion's other requirements are satisfied, the exclusion applies; otherwise, it does not. Since the fire pit, which was stored on the property for only a matter of months and used just once prior to the occurrence (in a different location), was not a condition of the parent’s premises, the UL Exclusion did not apply.

For more information regarding this alert, please contact Karen Mariscal (617.748.5225 / MariscalK@whiteandwilliams.com).  

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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