INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Business use justified excluding luxury contents
Business use justified excluding luxury contents
Chubb National Insurance Company (Chubb) had provided property coverage to Wesley Gibson (Gibson) for his large mansion at the time that a serious loss occurred. Lightning struck Gibson’s property, triggering a fire that resulted in a constructive total loss.
Gibson filed a claim for the loss of the mansion and its contents. The requested claim for the mansion was $8.75 million, the insurance policy’s limit; and Chubb paid that amount in full. Gibson also claimed a loss of $3.5 million for the mansion’s contents, again that amount was equal to the policy’s limit for contents. However, the most Chubb offered was $25,000, stating that the policy contained language that limited the total coverage for contents to that small amount. Specifically, the insurer relied on a policy sub-limit (a maximum of $25,000) that applied when personal property is used for business.
Gibson sued for the full amount of the contents limit that appeared in his policy. His complaint argued that the insurer was in breach of contract, conducted itself in an improper (“vexatious and unreasonable”) manner, and that its dealing was unfair or deceptive. Eventually, both parties filed for summary judgment. The trial court found in favor of Chubb, and Gibson appealed.
The higher court was tasked with evaluating the two issues at the heart of the dispute. First was the manner in which Gibson insured his mansion and contents. The second was how his property was used. Gibson originally arranged for coverage under a Chubb program designed for high-value homes. This aligned with his use of his property as a vacation home. However, after a few years, Gibson made changes in both the size of his property as well as its use.
Over his decades of ownership, he purchased homes nearby his original site. These properties were refurbished and became integrated into his main property. He also acquired and furnished his growing property with antiques and other luxury-level items such as expensive furniture and artwork. Further, significant renovations also occurred, such as a conference center and a pool.
The use of the property shifted from a vacation home to what Gibson’s website described as a “luxury country inn and resort.” However, what remained constant was that the property’s insurance remained under Chubb’s high-value homeowner’s program. Although the use of the property changed from residential to commercial use, the policy did not make a distinction on how coverage applied to the structures. However, that was not the case regarding the personal property.
The contents were subject to the insurance policy’s “Deluxe Contents” section. Chubb determined that a policy exclusion applied. According to the policy, when a policy’s property was used in connection with business conducted by the insured, coverage was excluded. However, the exclusion made a modest exception. A maximum amount of $25,000 was made available to business property under the policy’s “Extra Coverages” provision.
The higher court addressed Gibson’s arguments. It found that the policy’s definition of business property, though broad, was not ambiguous. It also found that the insurer’s handling of the claim could not be considered either vexatious or unreasonable. The court’s view was that the insurer investigated the claim and the claim circumstances properly, establishing that the loss involved damage to contents that were used in relation to the property’s year-round operation as a resort and events center. Nor did the insurer’s actions involve fraud or deception as Chubb’s rationale arouse out of applying the policy’s plain terms. The lower court decision in favor of the insurer was affirmed.
Wesley J. Gibson v. Chubb National Insurance Company—U.S. Court of Appeals for the Seventh Circuit—No. 25-1121—July 13, 2026.
