The Appellate Division, Second Department, recently construed a vandalism exclusion contained in a casualty insurance policy issued by Otsego Mutual Fire Insurance Company. Wai Kun Lee v Otsego Mutual Fire Insurance Company, A.D.3d, March 25, 2008.
Wai Kun Lee ("plaintiff") was the owner of a two-family residence in Brooklyn. Upon his return from a two-week vacation, he discovered that his tenant, with whom he had an acrimonious relationship, had moved out leaving the thermostat turned down to its lowest setting, which essentially shut off the heat and caused a pipe in the attic to burst resulting in extensive water damage to the property.
Plaintiff filed a claim under his policy with Otsego Mutual Fire Insurance Company ("Otsego Mutual"). Otsego Mutual denied the claim, citing policy exclusions for frozen pipes and accidental discharge of water. Plaintiff brought suit, alleging that the loss was the result of vandalism, a covered peril under the policy.
Otsego Mutual moved for summary judgment. Supreme Court denied the motion, and Ostego Mutual appealed. The Appellate Division affirmed. The Court noted that Otsego Mutual's burden was to establish, as a matter of law, that plaintiff's loss was not the result of vandalism, an insured peril. The Court applied the test applicable to construction of insurance contracts; namely, "'common speech, and the reasonable expectation and purpose of the ordinary businessman'".
The Court ruled:
The common meaning of the term 'vandalism' is the 'malicious or ignorant destruction of public or private property' (Webster's New World Dictionary [2d ed. 1978]). Ostego's submissions do not establish that the Plaintiff's loss resulted from a cause other than vandalism. Moreover, even if the term 'vandalism' were 'susceptible of two reasonable interpretations', ***and therefore was ambiguous, it must be construed in favor of the insured ***.
This decision highlights the rule that an insurer has the burden of proving that an exclusion applies to a claim. Additionally, it is an example of the Court's liberal interpretation of the term "vandalism" in favor of an insured.
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