Does the Standard Fire Policy Vacancy/Unoccupancy Condition Apply to a Fire Loss Occurring within Sixty Days of the Inception of Coverage?

I have handled many fire losses over the years involving vacant and/or unoccupied property.¹ In some losses, the fire occurred within 60 days of the inception of coverage; but, the insured property had been vacant or unoccupied for more than 60 days prior to the effective date of coverage. Invariably, the insurers in those fire losses denied the claim, taking the position that vacancy/unoccupancy² is measured from the inception of the vacancy/unoccupancy as opposed to the inception of coverage.

The 1943 New York Standard Fire Policy³ (“the Standard Fire Policy”) excludes coverage for a fire loss “while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of sixty consecutive days.”⁴ The phrase “beyond a period of sixty consecutive days” has been interpreted by courts to define the vacancy or unoccupancy prospectively, as opposed to retrospectively, meaning vacancy or unoccupancy is measured from the inception of coverage and not from the inception of the vacancy or unoccupancy.⁵ Thus, the Standard Fire Policy vacancy/unoccupancy condition does not apply where a fire loss occurs within 60 days of the inception of coverage.

While some courts have measured vacancy or unoccupancy from the inception of the vacancy or unoccupancy,⁶ the policies in those cases employed retrospective language excluding coverage if the insured property was vacant or unoccupied for a period of time before the loss and the fire losses there were in jurisdictions that did not have in place a statutorily-mandated Standard Fire Policy, which guarantees a minimum level of fire coverage that supersedes any attempt to limit or to restrict coverage to less than the statutory minimum.⁷

In short, the Standard Fire Policy affords policyholders coverage they may otherwise not have for a fire loss occurring to a property that is vacant or unoccupied at the inception of a policy.⁸
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¹ I wrote an article published in the American Association for Justice Trial magazine, Filling the Vacant Premises Void, which addressed numerous insurance issues presented by vacant and/or unoccupied commercial and residential properties.
² The term “vacant” generally means empty or without contents, while the term “unoccupied” typically means the lack of people’s habitual presence. Thompson v. Green Garden Mut. Ins. Co., 633 N.E.2d 1327 (Ill. App. 1994).
³ The Standard Fire Policy, a form consisting of 165 lines, has served as the foundation for most property insurance policies covering the peril of fire since its inception.
⁴ Lines 28-30 and 33-35 of the Standard Fire Policy form.
⁵ See Old Colony Ins. Co. v. Garvey, 253 F.2d 299 (4th Cir. 1958); United States Fid. & Guar. Co. v. Bd. of Educ. of Fairfield, 339 F.Supp. 315 (N.D. Ala. 1972); Bledsoe v. Farm Bureau Mut. Ins. Co., 341 S.W.2d 626 (Mo. App. 1960); Thomas v. Indus. Fire & Cas. Co., 255 So.2d 486 (La. Ct. App. 1971); Kolivera v. Hartford Fire Ins. Co., 290 N.E.2d 356 (Ill. App. 1972); Pappas Enterprises, Inc. v. Commerce and Indus. Ins. Co., 661 N.E.2d 81 (Mass. 1995); Estate of Higgins v. Washington Mut. Fire Ins. Co., 838 A.2d 778 (Pa. Supp. 2003).
⁶ See Gas Kwick, Inc. v. United Pac. Ins. Co., 58 F.3d 1536 (11th Cir. 1995); Babandi v. Allstate Indem. Co., 2008 WL 906116 (N.D. Ohio March 31, 2008); West Bend Mut. Ins. Co. v. New Packing Co., Inc., 2012 IL App (1st) 111507-U; Travelers Prop. Cas. Co. of Am. v. Superior Court, 155 Cal.Rptr.3d 561 (Cal. App. 2013).
⁷ The Standard Fire Policy, or a statutory version differing from it only slightly, is used in many states, including Arizona, California, Georgia, Idaho, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Nebraska, New York, and West Virginia.
⁸ In concluding that vacancy or unoccupancy should be measured from the inception of coverage, the courts in Kolivera, Pappas, and Estate of Higgins also reasoned that an insurer can inspect the insured premises to determine whether a vacancy or unoccupancy exists and either choose not to underwrite the risk or choose to provide coverage at an additional premium. In other words, an insurer cannot claim a violation of a vacancy/unoccupancy condition which it took no steps to discover.