Farm Bureau slapped down over misinterpretation of its own definition of "unoccupied" dwellingKathleen McNeel sued Farm Bureau for wrongfully denying payment on the Bundy farmhouse, which she had purchased in the 1970s, after it burned to the ground in 2003. McNeel had purchased Farm Bureau insurance on the house, which she occupied only sporadically. Farm Bureau took the position that no coverage was due because the house was "vacant" and "unoccupied" under the policy. After discussing these issues with a public adjuster representing McNeel for more than a year, Farm Bureau also claimed that she had delayed too long in filing suit.
After a jury trial resulted in a modest verdict for McNeel, Farm Bureau appealed. The Court of Appeals concluded that there was a fact question for jury determination on the issue of whether or not Farm Bureau had "declined" the claim. Very often the insurer is given a "pass" and allowed to claim the statute of limitations where it has taken ambiguous action that appears to decline and still negotiate a claim, however, in this case the Court found objective evidence that it had reconsidered its denial for several months. On that basis, it allowed the jury verdict to stand.
The Court also pointed out that Farm Bureau's interpretation of its exclusion was contrary to dictionary definitions of the operative terms and inconsistent. Farm Bureau argued that the farmhouse must be occupied for six straight months; whereas its policy only required that it NOT BE UNOCCUPIED for six straight months. Further, while Farm Bureau conflated the terms "vacant" and "unoccupied" in its argument, the Court noted that each had a separate definitive term in the policy (60 days vacant; six months unoccupied) and a different dictionary meaning. On that basis the Court insisted on applying the terms as defined in the policy and the dictionary. The Court also reversed the trial court's determination that McNeel's attorney should not recover fees equal to those charged by Farm Bureau's attorney: it held that as sanctions for Farm Bureau's rejection of case evaluation, the Plaintiff had documented fees at least equal to those charged by the Defendant.