In Farm Bureau v. Davenport, 2017 Ark. App. 207, Davenport had 2 houses, one in Michigan and one in Arkansas. While at the Michigan house, the Arkansas house was broken into and set on fire. Farm Bureau denied the claim because the house was unoccupied when the house was destroyed. One of the policy conditions, “Vacancy or Unoccupancy” said the policy wouldn’t cover vandalism losses “if you vacate or fail to occupy the dwelling on the residence premises for a period of thirty (30) consecutive days. . .”; and if “you vacate or fail to occupy the dwelling on the residence premises for a period of sixty (60) consecutive days” the policy wouldn’t cover any property loss. “Unoccupied”was defined as “being without human inhabitants, but containing enough furnishings or other personal property to show an intention to return and occupy the dwelling. . .” “You” and “your” was defined as the named insured, spouse, and dependent resident relatives. When Davenport sued, Farmers admitted the property had been destroyed by vandals, but claimed there was no coverage because the property hadn’t been occupied for 60 days. The jury found for Davenport and the appellate court affirmed.
The insured policyholder has the burden of proof on a condition precedent, but the insurance company has the burden of proof on an exclusion. Thus an insured policyholder has to prove the loss comes within the policy coverage, and the insurance company has to prove that an exclusion applies.
There is a distinct difference between a condition and an exclusion in an insurance policy. A “condition precedent” in an insurance policy is “a condition to be performed before a right of action dependent upon it will accrue, such as proof of loss[.]” Hill v. Farmers Union Mut. Ins. Co., 15 Ark. App. 222, 225, 691 S.W.2d 196, 198 (1985) (citing Garetson- Greason Lumber Co. v. Home L. & A. Co., 131 Ark. 525, 199 S.W. 547 (1917)). We have held that “the performance of [such condition] should be pleaded in the complaint.” Id. An exclusion, on the other hand, exists when coverage generally exists, but some language in the policy eliminates that coverage. See, e.g., Parker v. S. Farm Bureau Cas. Ins. Co., 104 Ark. App. 301, 304, 292 S.W.3d 311, 314 (2009) (“Once it is determined that coverage exists, it then must be determined whether the exclusionary language within the policy eliminates that coverage.”).
Even though the vacancy clause was under a policy section labeled “Conditions”, the clause “presupposes that coverage exists but can be eliminated by Farm Bureau based on some action on the part of the insured. Therefore, we conclude that the policy language in this case is an exclusion, despite the caption heading.” Thus, Farm Bureau had the burden of proving vacancy, and the insured did not have to prove occupancy, so the directed verdict was properly denied.
While the meaning of the word “unoccupied” is a question of law, its application is a question of fact.
Ordinarily, however, “the question whether a building is vacant or unoccupied at the time a loss occurs is one of fact for the jury.”
While the Davenports were last at the house in April, 2010, their son stayed there for several days in September, 2010, the same month the house burned down. At the time of the fire, the house was fully furnished, was equipped with fully functioning utilities, and food was stocked in the refrigerator and the freezer. And since there was some evidence of occupancy during September, 2010, the jury had some evidence upon which to base the judgment and the motions for directed verdict and for new trial were properly denied.
Since Farm Bureau had the burden of proof on its occupancy exclusion, the trial court properly instructed the jury on the elements of the claim. Further, there was no prejudice in failing to instruct the jury on the words inhabit and inhabitant where the plaintiff had read the proposed definitions to the jury, and Farm Bureau got to argue about it in closing argument.