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burning houseIn an important victory for policyholders, the Massachusetts Federal Court recently granted coverage to an innocent insured whose son was alleged to have caused the fire that destroyed the family house. Massachusetts insurers – in this case Metropolitan Property and Casualty – often deny coverage to a named insured where an additional insured, such as a family member, intentionally causes a fire or other loss. A property owner who had nothing to do with a fire can thus be left with a burnt home and no coverage.

This new ruling clarifies that Massachusetts is on its way to joining the majority of states where an innocent insured can receive coverage if not involved in the fire.

In the case, a mother was the sole owner of her Salem house and the only named insured under the policy. The judge found that her grown son was a resident of the household, and thus an additional insured under the policy. The son did not have his own house. Rather, he stayed in motels while travelling for his job and lived with his mother when not on the road.

The judge, however, declined to adopt the reasoning of a 1938 decision on which many Massachusetts insurers rely to deny coverage in such circumstances. The judge noted that a growing majority of states, as well as two lower Massachusetts courts, have found coverage for an innocent insured.

The judge ruled that the language in the policy in this case would technically deny coverage for all insured parties – even those who are innocent of any wrongdoing. The judge noted, however, that this language deviated from the model Massachusetts policy, which distinguishes between “the insured” and “a(ny) insured.” The judge ruled that “the” insured is not barred from coverage where “a” insured intentionally causes the damage. Accordingly, “the insured” mother is not barred from coverage where her “additional insured” son may have caused the fire.

While a significant victory for policyholders, the judge indicated that the outcome may have been different if the party who started the fire was also a named insured. So, where both spouses are named in the policy, there may not be coverage for the innocent spouse.

Finally, it is important to note that the Massachusetts Supreme Judicial Court has not itself weighed in on this important issue. The federal court judge was required to base his ruling on a prediction that the Massachusetts Supreme Judicial Court would join the growing majority of states allowing coverage for an innocent insured.

Gardner & Rosenberg, P.C. represents policyholders in all types of complex coverage disputes involving many different types of policies, including Director and Officer, Commercial General Liability, Employment Practices Liability, Errors and Omissions, Life, Homeowners, and Long Term Care.