A recent Illinois Circuit Court decision provides an excellent analysis of why insurance companies cannot deny fire claims under vacancy exclusions by claiming that arson is a form of vandalism. The case, Amjad Abudayya v. Country Mutual Insurance Company, 1 demonstrates how careful judicial reasoning can expose flaws in insurance company coverage denials.
The facts are straightforward – a building insured by Country Mutual suffered fire damage after being vacant for over six months. The fire was intentionally set by an unknown person. Country Mutual denied coverage, arguing that since the building was vacant for more than 60 days, the “vandalism” exclusion in the vacancy clause barred coverage.
The court’s analysis is particularly noteworthy because the judge took considerable time to thoroughly examine the policy language and legal principles at play. In an era where state trial courts face overwhelming caseloads, it’s refreshing to see such a detailed and well-reasoned opinion that carefully walks through the insurance coverage issues.
The heart of the decision focuses on how fire and vandalism are listed as separate perils in the policy. The court recognized that while an intentionally set fire could be considered vandalism in isolation, the policy’s structure suggests these perils have independent meanings. The vacancy clause specifically excludes “vandalism” but still provides coverage for “other covered causes of loss” with a 15% reduction in payment.
The court found that Country Mutual’s interpretation created an ambiguity by essentially arguing that “vandalism” means different things in different parts of the policy – not including intentionally set fires for general coverage purposes but including such fires under the vacancy exclusion. This type of ambiguity must be resolved in favor of coverage.
This decision highlights a recurring issue in property insurance claims – insurance companies often try to expand exclusions beyond their clear meaning to avoid paying claims. Here, Country Mutual attempted to transform an arson fire into “vandalism” simply because the building was vacant. However, as the court correctly noted, if the insurer wanted to exclude intentionally set fires during vacancy periods, it could have clearly stated this in the policy.
The ruling reinforces important principles of policy interpretation that favor policyholders. Insurance policies must be read as a whole, exclusions must be clear and specific, and any ambiguities must be construed against the insurer who drafted the policy. The court’s thorough analysis shows why these principles matter in real-world claims.
For policyholders and their advocates, this decision provides valuable precedent for challenging similar coverage denials. It demonstrates that courts will carefully examine policy language and reject insurance company attempts to expand exclusions beyond their clear meaning. The detailed analysis also gives practitioners strong arguments for future cases involving vacancy exclusions and the relationship between fire and vandalism coverage.
We should applaud the Illinois trial court judge for taking the time to produce such a comprehensive and well-reasoned opinion. While many trial courts might have issued a brief ruling given their heavy caseloads, this judge obviously recognized the importance of carefully analyzing the coverage issues and providing clear guidance for future cases. The resulting decision serves as an excellent example of how courts should approach insurance coverage disputes.
These issues were common during the economic downturn, which I discussed fifteen years ago in Vandalism, Theft and Arson Insurance Claims Rise. The issue was also noted in Arson of Vacant House: Covered Fire Loss or Excluded Vandalism? We also noted it was decided against the policyholder in “Vandalism And Malicious Mischief” Can Include An Intentionally Set Fire (Arson).
Finally, the policyholder in the primary case discussed in this blog was represented by one of the finest first-party property insurance attorneys in the country, Ed Eshoo.
Thought For The Day
“A good lawyer doesn’t just interpret the law—they breathe life into it, ensuring it serves the needs of the people and protects those who cannot protect themselves”
—Clarence Darrow
1 Abudayya v. Country Mut. Ins. Co., No. 2023-LA-10 (Ill. Cir Ct. Oct. 1, 2024).
