Please set up your API key!

The Rough Notes Company Inc.

Glassblowing gaffe: Must HO policy pay?

Glassblowing gaffe: Must HO policy pay?

January 29
08:26 2018

Glassblowing gaffe: Must HO policy pay?

Wilbur Shriner, a retired physician, owned a glassblowing studio on Church Street in Burlington until he sold the property in December 2007 and moved the glassblowing equipment to his home in Charlotte. He and his friend, also a glassblower, eventually set up the equipment in the garage at Shriner’s property and began making glass in late 2008 or early 2009. From 2009 to 2012 Shriner and his friend “sometimes made glass for a week or two, and then would shut down for weeks due to lack of money.” During that three-year period they made glassware approximately one time per week on average, and glassmaking was never more than an occasional or part-time activity for Shriner. Throughout those three years, Shriner earned income from glassblowing, as well as from the redevelopment and rental of investment properties and from an organic honey and vegetable operation.

Shriner and his friend called their enterprise Church and Maple Glass Studio and maintained a website from which customers could purchase their glassware. Shriner identified himself as an “artisan” on his tax forms, and in all years relevant to this case he filed a Schedule C form for business profits or losses with the Internal Revenue Service. He described his business type as “blown glass manufacturing” on the IRS forms and reported sales ranging from $4,036 in 2013 to $30,350 in 2010. He also reported business expenses for items including advertising, contract labor, legal and professional services, office space, meals, and entertainment.

On January 12, 2012, the furnace exhaust system in a piece of glassmaking equipment malfunctioned and caused a fire that destroyed the garage and all of the property and equipment inside it. At the time, Shriner’s home was covered by a homeowners policy with Amica Mutual Insurance Company that covered losses from fire and provided replacement coverage for buildings and personal property. The policy carried a $25,000 deductible and contained an exclusion from coverage for structures from which a business was conducted. Shriner submitted a personal property inventory for the property destroyed in the fire with a replacement cost totaling $88,354.91.

Amica accepted Shriner’s claim and determined the replacement cost of the garage to be $42,422.97. Amica applied the policy’s $25,000 deductible and made an actual cash value payment of $1,460.53 as an advance partial payment to Shriner for the garage. Amica then changed positions and, asserting that Shriner’s glassblowing activities constituted a “business” for purposes of the policy’s exclusion, refused to make any further payments to replace the garage. Amica paid Shriner $11,613 for nonbusiness property that was destroyed in the garage but capped its payment for other property in the inventory at $2,500, which was the maximum reimbursement permitted under the policy for “business” personal property. Shriner sued to recover the full amount of his claim, and the court granted summary judgment to Amica. Shriner appealed.

The court noted that the policy capped recovery for “property, on the residence premises, used primarily for business purposes” at $2,500 and excluded entirely from coverage “structures from which business is conducted” and “structures used to store business property.” A Vermont-specific amendatory endorsement attached to the policy deleted the standard form homeowners policy definition of “business” and replaced it with: “Business includes trade, profession or occupation.”

Shriner argued that “the court must read the policy and the amendatory endorsement together” and that read- ing the deleted language from the standard insurance provision and the amended language from the endorsement together creates ambiguity. The court rejected this attempted construction of the policy.

Shriner argued that although his glassblowing was a part-time trade, profession, or occupation, it nevertheless fell outside the policy because the Vermont endorsement “narrowed the definition of ‘business’” by removing “part-time or occasional trade, profession, or occupation from the definition.” However, the court said, the limitation Shriner sought to apply was never in his policy; the policy that Shriner purchased always deleted the standard form definition of “business,” and the “original” definition from the standard-form policy was never operative. The only definition of “business” that applied to Shriner was that in the Vermont endorsement, and the court said it was required to consider only the language of that endorsement. Thus, in interpreting the policy at issue the court could not compare the language of the endorsement to the language of the standard form provision unless it concluded that the endorsement language was facially ambiguous. Rather, the court said, its interpretation of the policy must begin with the policy language that was applicable to Shriner—namely the Vermont-specific endorsement.

The court said it could not conclude that the language of the endorsement was ambiguous as to the scope of the word “business”: Shriner’s policy unambiguously excluded from coverage property connected to full- and part-time business.

Amica argued that the activities Shriner undertook in connection with his glassblowing activities unambiguously constituted a “business” under the terms of the policy. The court agreed that Shriner’s glassblowing was a full- or part-time business and that coverage for the garage and business property was precluded under the business exclusion. The judgment of the lower court in favor of Amica was affirmed.

Shriner vs. Amica Mutual Insurance Company-Supreme Court of Vermont-April 7, 2017-No. 16-269.

Warning: count(): Parameter must be an array or an object that implements Countable in C:\inetpub\wwwroot\roughnotes\wp-content\themes\legatus-theme\includes\single\post-tags.php on line 5

Related Articles






Philadelphia Let's Talk - Click Here

Spread The Word & Share This Page

Trending Tweets