Loss of the insured's home caused by a renter who demolished the home was covered under the homeowner's policy. Fisher v. Garrison Prop. & Cas. Ins. Co., 2017 Idaho LEXIS 143 (Idaho May 26, 2017).
The insured, Shammie L. Fisher, entered a Purchase Agreement to sell her home to Ron Reynoso. The purchase of the property was contingent upon Reynoso obtaining financing. Before completing the purchase, he would lease the property. The Agreement stated, "Buyer intends to make certain improvements to the property upon possession, with the intent to sell the property for a profit."
Within two months of renting the property to Reynoso, Fisher learned that he had demolished the entire house down to the foundation. He then ceased work and left. Fisher made a claim under her policy, but Garrison Property and Casualty Insurance Company denied coverage based upon the exclusion for faulty, inadequate or defective work. When Fisher sued, the trial court granted summary judgment to Garrison.
On appeal, the Idaho Supreme Court first noted that for the exclusion to apply, the direct physical loss to Fisher's house must have been caused by faulty, inadequate, or defective design, workmanship, repair, construction renovation, remodeling, etc. The insurer first contended that the cause of the loss was the failure of Reynoso to complete the rebuilding of a house on the foundation that remained after he had demolished Fisher's house. This was not the loss, however. The house that Reynoso intended to build was not the same "dwelling on the Described Location," as set forth in the policy. Fisher's loss occurred when Reynoso demolished her house. Therefore, the loss was the destruction of the house.
Further, the faulty construction or design exclusion did not apply. The destruction of the house was not caused by any faulty, inadequate, or defective workmanship on the part of Reynoso. There was no evidence that the loss to the house was caused by Reynoso's lack of skill or expertise in doing the work. Nor was the loss caused by anything that Reynoso did in performing repairs to the house.
Further, the loss was not caused by any construction done by Reynoso that was faulty, inadequate, or defective. Nor was there an evidence that the destruction of Fisher's house was caused by renovation or remodeling.
Consequently, the faulty, inadequate or defective work exclusion did not apply and the judgment for the insurer was vacated.