469_C342
HOMEOWNERS
CHALLENGE CODE ENFORCEMENT LIMIT
|
Homeowners |
|
Ordinance or
Law |
On June 20, 2007, a fire
severely damaged Rex and Brenda Allemand's house in
The Allemands'
house was insured by State Farm Insurance Companies. The maximum coverage under
the policy to repair or replace the house with similar construction was
$89,866. The policy excluded "increased costs resulting from enforcement
of any ordinance or law," including "construction, repair or
demolition." The Allemands had purchased
optional additional coverage allowing for payment of a sum equal to 10% of the
policy maximum for costs resulting from building code enforcement (Option OL).
State Farm paid the Allemands the policy maximum for
repairs plus the 10% Option OL coverage, for a total of $59,663.55.
Unhappy with this amount,
the Allemands filed a declaratory judgment action
against the insurer. The trial court found in favor of the Allemands,
awarding them an additional $37,001. State Farm appealed.
On appeal, the Allemands argued that the policy was generally ambiguous
and should be construed in their favor. In addition, they argued that the
provision that addressed Option OL was ambiguous because the provision
referenced the policy limits shown in the declarations page, but the coverage
limits page was not titled "Declarations."
The Court of Appeals of
Washington, Division 3, disagreed. According to the court, the policy expressly
provided that it covered building code upgrades only under the optional OL
coverage and the Allemands were aware that under
Option OL the coverage was limited. The court concluded that the policy's limit
on losses resulting from the building code upgrades was appropriate.
The decision of the lower
court was reversed.
Allemand vs. State Farm Insurance
Companies-No.
28954-1-III-Court of Appeals of