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Appellate court affirms summary judgment for rental property owner in insurance dispute

October 16, 2018

The Indiana Court of Appeals affirmed the grant of summary judgment to a rental property owner involved in an insurance dispute following a house fire of one of her rental properties after finding a garage that was damaged in the fire should have been covered under the property’s insurance policy.

Rental property owner Christina Basham filed a claim with her insurance company, Berkshire Hathaway, for damages to one of her rental homes after a fire burned down its garage and greatly damaged the house. Berkshire Hathaway paid for the damage to the house but denied Basham’s claim for damage to the detached garage, finding the garage did not meet the policy’s definition of “covered property.” It also said the garage was not specifically insured on the policy, which only applies to covered property.

Basham responded by filing suit against the insurer, alleging it had wrongfully denied coverage on the garage. Both parties filed cross-motions for summary judgment, and the Madison Circuit Court ultimately entered summary judgment for Basham, denying Berkshire Hathaway’s motion.

Berkshire Hathaway challenged that ruling on interlocutory appeal, but in its opinion affirming the trial court, the Court of Appeals noted the insurance policy defined “covered property,” in relevant part, as the “Building, meaning the building or structure described in the Declarations” plus any “completed additions[.]”

Though the language of the policy did not lead the court to believe the detached garage was considered part of “the building” under the policy, the court did find that the garage was covered under the “completed addition” language.

“As Berkshire Hathaway suggests, a ‘completed addition’ can refer to a structure that is physically attached to a building,” Judge Edward Najam wrote. “But that term can also refer to a supplementary structure that is separate from a building.

“Thus, Berkshire Hathaway’s reliance on one definition to the exclusion of another is misplaced,” Najam continued. “…Because the term ‘completed addition’ is ambiguous, we strictly construe it against Berkshire Hathaway.”

Thus, the appellate court concluded the trial court did not err in entering summary judgment for Basham in Berkshire Hathaway Homestate Insurance Company v. Christina Basham d/b/a Basham Family, L.P., Voldico, LLC, Andrew Vollmer, Standard Agencies, Inc., and Carol J. Jenkinson,18A-PL-446.

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