Source: https://agencychecklists.com/2018/06/19/metropolitan-must-pay-salem-homeowner-for-fire-loss-despite-innocent-co-insured-doctrine-24437/
Timestamp: 2019-04-24 14:32:38+00:00

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Ms. Kallen writes a well-regarded blog on Insurance Coverage Law in Massachusetts. We love her blog and have asked her to let us reprint her posts on things we think might be of interest to the independent agents of the Commonwealth.
The following expands upon a recent post from her blog about a recent United States District Court case, Shepperson v. Metropolitan Prop. & Cas. Ins. Co.
In the Shepperson case, the United States District Court for the District of Massachusetts addressed the “innocent co-insured doctrine” in relation to a fire loss to a homeowner in Salem.
That doctrine applies to property policies that insure more than one person. If one of them commits an intentional act that causes damage to the insured property, that insured has no coverage because the policy excludes losses caused by intentional acts. Under the innocent co-insured doctrine, however, the other innocent insured person also cannot recover under the policy. That doctrine applies to property policies that insure more than one person.
Ms. Shepperson maintained a homeowner’s insurance policy for home in Salem, Massachusetts. Her policy, which was with Metropolitan, had coverage effective from July 13, 2015, to July 13, 2016. On March 4, 2016, a fire damaged the insured premises. The fire started when Ms. Shepperson’s son, Scott, “accidentally” set the house on fire while entering inside the house with a can of gasoline and a lit match he was using to light a cigarette.
Metropolitan’s policy required Ms. Shepperson to cooperate with Metropolitan’s investigation into the fire, to submit to an examination under oath, and to produce pertinent documentation and information in support of her claim.
During her examination under oath conducted in April 2016, Ms. Shepperson testified that on the date of the fire her son, Scott was living at the insured premises.
An independent fire expert in cause and origin analysis, hired by Metropolitan, found the fire had originated on the first and second floors of the insured premises and that there were at least eight separate points of origin. The independent expert advised Metropolitan that the fire was incendiary in nature.
Metropolitan sought to have Scott submit to an examination under oath, but he failed or refused to appear on the date Metropolitan had scheduled. He also failed or refused to produce the pertinent documentation requested from him by Metropolitan relating to the fire investigation.
In September 2016, based on the results of its investigation, Metropolitan notified Ms. Shepperson that it had determined her claim was not a covered loss under the clear and unambiguous language of the policy. Metropolitan based its decision upon its determination that the subject fire was intentionally set by Scott, who was a “resident” of the insured premises at the time of the subject fire.
with the intent to cause a loss.
Ms. Shepperson sued Metropolitan in the Essex County Superior Court, but Metropolitan removed the suit to the United States District Court in Boston.
In Federal court, both Ms. Shepperson and Metropolitan moved for summary judgment. Metropolitan claimed its policy exclusion on intentional acts by insureds prohibited any recovery if the loss arose from an insured committing arson. Ms. Shepperson claimed that the exclusion could not bar recovery of an innocent insured, such as herself, under the standard form fire policy form required by Mass. Gen. Laws c. 175, § 99.
No company shall issue policies or contracts which, . . . insure against loss or damage by fire…to property or interests in the commonwealth, other than those of the standard forms herein set forth [inapplicable exceptions omitted].” G.L. c. 175, § 99.
The judge stated the question presented was whether Mass. Gen. Laws c. 175, § 99 assures property damage coverage for an innocent named insured when an unnamed co-insured resident of the premises they share intentionally sets those insured premises afire.
In making his decision, the judge noted, “The clear trend has been in favor of allowing innocent co-insured coverage.” He noted the language of the policy states that “no one defined as you or your is entitled to coverage, even people defined as you or your who did not commit or conspire to commit the act causing the loss.” This language is clear and unambiguous. The provision suspends coverage for all insured parties—even those who were innocent of any wrongdoing—when any insured party causes an intentional loss.
However, the judge stated the issue is not whether the policy language is clear, but rather whether the policy provision complies with the mandate of Mass. Gen. Laws c.. 175, § 99. He concluded the exclusion, while clearly expressed, appeared prohibited in Ms. Shepperson’s circumstance by §99.
The record before the judge showed Ms. Shepperson was away from the insured premises at the time of the fire and that she had no involvement in causing the fire. Metropolitan produced no evidence to suggest otherwise and did not even bother to ask about her involvement during her examination under oath.
To the judge, whether Scott’s actions that resulted in the fire were accidental or intentional was of no consequence to Ms. Shepperson’s claim, given her lack of involvement in the fire and consequent lack of any intent, actual or constructive, to cause it.
On the evidence before him, the judge found as a matter of law that Ms. Shepperson was an “innocent insured” and based on the terms of the standard policy statute, M.G.L. c. 175, § 99, the judge further found Ms. Shepperson, as an innocent insured, was entitled to summary judgment against Metropolitan on her breach-of-contract claim.
second, the household member was made an insured by the operation of the policy language, such as a definition of insureds that includes any relatives who are household members, rather than by a conscious decision to make them an insured listed by name on the policy.
Nina Kallen has been an attorney in Massachusetts since 1994. Her practice focuses mainly on general litigation and in particular insurance coverage issues. You can learn more about her, and find links to her published opinions, at www.kallenlawyer.com.
In 2008, Kallen began her blog Insurance Coverage Law in Massachusetts which was named a Top 50 Insurance Community Law blog in 2008, 2009 and 2011 by LexisNexis.
Does this also mean that the son could then be tried for insurance fraud?
The mother’s suit was a civil matter any charges against the son would be criminal. The two proceedings are independent legally. Metropolitan would have reported this in the ordinary course of business to the Insurance Fraud Bureau. Then it is up to the Bureau to refer it local or state prosecutors if there is sufficient evidence. Those prosecutors do not accept every referral for prosecution and there was nothing I found indicating any criminal charges had been filed as a result of this fire.

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