Home burn; insurer claims arson; jury verdict for homeowner; insurer appeals; verdit over-turned
Ginger Stein's mobile home burned in 2007. She filed a claim with her insurer, the Home-Owners Insurance Company, but the insurer claimed that the home was burned with Stein's consent and denied any compensation. The evidence cited by the insurer included a neighbor seeing a car in Stein's driveway while Stein was away, and an investigator's claim that the fire appeared to have been intentionally set by an amateur.
Stein filed suit and the case went to trial. At trial, the jury awarded Stein a total judgment of just under $200,000.00. The insurer appealed, arguing that the judge instructed the jury improperly because he told jurors that Home-Owners must prove its arson with consent exclusion with "clear and convincing" evidence. The judge adapted this instruction from the standard jury instructions relating to allegations of fraud.
This week the Court of Appeals overturned the verdict and ruled that even though the insurer is alleged fraud by the insured, it need not proved its fraud defense with "clear and convincing evidence." Unlike other parties alleging fraud, the Court held that an insurer who puts a fraud defense in its policy need only prove the contract defense by a "preponderance of the evidence." Stein will be forced to try her case again, six or eight years after the fire, and the insurer won't be held to the normal standard of proof for fraud claims.