The Texas Supreme Court determined that a damaged fence attached to the insureds' dwelling was covered under the dwelling provisions, not the "other structure" portion of the policy. Nassar v. Liberty Mutual Fire Ins. Co., 2017 Tex. LEXIS 113 (Tex. Jan. 27 ,2017).
The insureds' owned six acres of property. Hurricane Ike caused significant damage to the property on September 13, 2008. The insureds submitted a claim to Liberty Mutual under their homeowners' policy. Liberty Mutual paid several claims, but disputes arose over the value of various items of damaged property, including the fencing on the property. The insured's fencing spanned over 4,000 linear feet, including a white picket fence at the northeast corner of the dwelling, an ornamental iron fence in front of the dwelling, numerous cross fences, garden fences, and a larger, perimeter fence.
The policy offered $247,200 in coverage under the dwelling provision and $24,720 in coverage under the "other structures" provision. The policy provided "dwelling" and "other structure" coverage as follows:
- the dwelling on the residence premises shown on the declarations page including structures attached to the dwelling.
- other structures on the residence premises set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line or similar connection.
The undisputed value of the damage to the fencing was $58,665. Because Liberty Mutual considered the fencing to be an "other structure," it issued payment to the insureds for $20,090.61 under the "dwelling" coverage and a separate payment of only $24,720, or policy limits, for the fencing.
The insureds argued they were entitled to additional amounts under the dwelling provision for the damaged fence. Under the plain language of the provisions, the insureds argued, the fencing was attached to the house at four separate points and was a "structure attached to the dwelling." Liberty Mutual argued, on the other hand, that simply connecting 4,000 feet of fencing to the dwelling by four bolts did not attach the fencing to the dwelling. Further, the only logical reading of the policy provisions together meant that a fence could not operate to connect the dwelling to other structures; therefore, the fencing had to be an "other structure."
The insureds brought suit and cross motions for summary judgment were filed. The trial court granted Liberty Mutual's motion, deciding coverage for the fencing was as an "other structure" under subsection (2). The court of appeals affirmed.
The Texas Supreme Court reversed the court of appeals. The court noted that the fencing was composed of parts purposefully joined together and fastened to the dwelling by bolts or cement.
In subsection (2), "other structures" were clearly identified as those structures on the residence premises that were "set apart by clear space." The policy then provided, "This includes structures connected to the dwelling by only a fence, utility line or similar connection." Liberty Mutual argued that this sentence identified a fence as a "connection" and not a "structure," and as a "connection," a fence was unable to attach "other structures" to the dwelling. Liberty Mutual then concluded that this interpretation prevented a fence from being part of the dwelling.
The supreme court disagreed. The second sentence of subsection (2) operated to prevent a fence attached to the dwelling from causing structures attached to the fence to be covered under subsection (1). In other words, the first sentence of subsection (2) identified what was to be covered, and the second sentence limited that coverage.
It was up to a fact finder to determine whether all of the 4,000 feet of fencing constructed of different materials and spanning six acres was part of the "structure attached to the dwelling."
In conclusion, the insureds' interpretation of the policy was reasonable and Liberty Mutual's interpretation was unreasonable. The case was remanded to the trial court for further proceedings.