A federal Arkansas courtroom issued a latest ruling that reminds everybody within the property insurance coverage claims enterprise of the intense penalties policyholders face when the insured constructing is vacant or unoccupied. 1 Kenneth Milligan bought a long-vacant home for $7,000 and instantly obtained a landlord insurance coverage coverage from Vacationers Private Insurance coverage Firm. The coverage got here with a $368,000 restrict, and simply days later, the property was destroyed by hearth. Milligan filed a declare, however Vacationers denied protection, citing coverage exclusions associated to emptiness and vandalism. The dispute finally culminated within the insurer’s movement for abstract judgment, which the courtroom granted.
The information, as introduced by Vacationers and uncontested by Milligan, painted an image of a property devoid of the hallmarks of regular occupancy. The home had no utilities, no home equipment, and just a few items of damaged furnishings. Notably, a neighbor who had lived subsequent door for twenty years confirmed that the property had by no means been inhabited for 20 years. Much more critically, Milligan didn’t problem any of those information in a fashion required by the courtroom’s procedural guidelines. He didn’t file a response contesting the insurer’s assertion of fabric information, and his solely submission was a single-sentence denial of the movement with a imprecise expression of his need to proceed. This procedural failure meant that the courtroom accepted Vacationers’ model of occasions as true.
The insurer’s investigation revealed that the fireplace originated in two separate areas—one within the base of the house’s electrical panel and one within the inside stairwell. Nevertheless, the home had no electrical energy related and no gasoline service. Surveillance video from a neighbor’s safety digital camera confirmed a person being dropped off behind the home early within the morning on the day of the fireplace, carrying a container, strolling across the residence, after which leaving. Smoke was seen minutes later. An knowledgeable hearth investigator employed by Vacationers concluded that the fireplace was deliberately set, most probably by human involvement, given the whole lack of utilities and home equipment that might have brought about an unintended hearth.
The courtroom concluded that the fireplace can be coated except information confirmed that two key exclusions within the coverage barred protection. The primary was whether or not the house had been vacant for over 60 consecutive days earlier than the fireplace. The second was whether or not the fireplace was the results of vandalism. The decide emphasised that there was no real dispute of fabric truth, as Milligan had supplied no proof on the contrary. The courtroom discovered that the construction was vacant and that the arson hearth constituted vandalism.
This case illustrates how vacant or unoccupied buildings elevate crimson flags for insurers, significantly when vital claims are filed shortly after insurance policies are issued. Courts will scrutinize such circumstances carefully, and when information present {that a} property just isn’t maintained or occupied in a significant method, exclusions for emptiness and vandalism will come into play.
The ruling serves as a cautionary story for policyholders who try and insure long-abandoned or vacant properties. Insurers will apply heightened scrutiny to such claims, particularly the place proof of arson exists. Milligan’s lack of engagement within the factual dispute sealed the end result. His silence within the face of the insurer’s proof ensured the abstract judgment.
One level not raised is the problem of whether or not arson is vandalism. I counsel that these on this subject learn the article I wrote about Ed Eshoo, who gained a case final 12 months on this level, Emptiness Exclusions for “Vandalism” Ought to Not Apply to Arson Fires.
Thought For The Day
“Details don’t stop to exist as a result of they’re ignored.”
—Aldous Huxley
1 Millgan v. Vacationers Private Ins. Co., No 2:23-cv-00179 (E.D. Ark. Apr. 28, 2025).
