Bosecker v. Westfield Ins. Co.

• Decision Date: 23 February 2000
• Docket Number: No. 82S04-9902-CV-148.,82S04-9902-CV-148.
• Citation: 724 N.E.2d 241
• Parties: William L. BOSECKER and, Diane Bosecker, Individually, Appellants (Plaintiffs Below), v. WESTFIELD INSURANCE COMPANY and Sam T. Heston & Sons, Inc., d/b/a Heston Insurance Agency, Appellees (Defendants Below).
• Court: Indiana Supreme Court

724 N.E.2d 241

William L. BOSECKER and, Diane Bosecker, Individually, Appellants (Plaintiffs Below), v. WESTFIELD INSURANCE COMPANY and Sam T. Heston & Sons, Inc., d/b/a Heston Insurance Agency, Appellees (Defendants Below).

No. 82S04-9902-CV-148.

Supreme Court of Indiana.

February 23, 2000.

Donald R. Wright, Evansville, Indiana, Attorney for Appellants.

Jeffrey W. Henning, James D. Johnson, Jennifer L. Johnson, Evansville, Indiana, Attorneys for Appellees.

ON PETITION TO TRANSFER

BOEHM, Justice.

This case turns on whether the builder's risk policy involved here, acquired for the specific purpose of repair and renovation of an existing building, covers the building before any work has started. We hold that the language in this policy is ambiguous and therefore must be construed in favor of the insured to provide coverage starting from its effective date.

In the mid-1980s, William and Diane Bosecker purchased a piece of real estate in Evansville containing a four-unit apartment building and another small structure. In June of 1995, they sold the property to Jason Bartley under a conditional sales contract, but on February 22, 1996, Bartley returned the property to the Boseckers after he was unable to make the payments.

Diane immediately contacted her insurance agency, Heston Insurance Agency, told Diane Terrell, an agent for Heston, that the property was vacant and had water problems, and inquired about obtaining insurance on the property.¹ Terrell first agreed to bind the property under what was variously described as a "standard apartment house" or "landlord's" policy from Westfield Insurance Company, the Boseckers' insurer at the time, but then concluded that she would need additional information. William called Terrell the next day, February 23, and gave her the size and age of the buildings and reported that he had received notices from the City of Evansville Code Enforcement Division requiring that the buildings be vacated and repairs made under threat of razing the buildings. Based on this information, Terrell and the president of Heston decided that the property would not be eligible for the standard apartment building policy, and instead added it as an endorsement to an existing builder's risk policy from Westfield that insured other properties of the Boseckers.

The policy contained two apparently inconsistent provisions defining the covered risks. Section A(1)(a) defined "Covered Property" as "[b]uildings or structures including foundations while in the course of construction, installation, reconstruction, or repair." Section A(2)(b) of the policy described "Property Not Covered" as "[e]xisting buildings or structures to which improvements, alterations, repairs, or additions are being made." On the face of these two provisions, a structure is both covered and not covered if it is under repair.

Approximately ten hours after the property was added to the policy, at 2:00 a.m. on the morning of February 24, the apartment building was destroyed by fire. In its response to the Boseckers' claim for the fire loss, Westfield denied coverage based on the "Property Not Covered" definition, apparently on the assumption that "improvements, alterations, repairs, or additions" were being made.

The Boseckers filed suit against Westfield on July 23, 1996, and amended their complaint nine months later, on April 25, 1997, to include a claim against Heston. Heston then cross-claimed against Westfield and all parties filed motions for summary judgment. Westfield based its motion on the fact that the property was not "Covered Property" because the Boseckers had not yet started the anticipated repairs. The trial court granted Westfield's motion for summary judgment and the Boseckers appealed. The Court of Appeals affirmed the trial court's grant of summary judgment in favor of Westfield, holding that although the policy was ambiguous in the respect already noted, the loss was not covered because the Boseckers had taken no action to start the repairs and the property was therefore not "in the course of reconstruction or repair." Bosecker v. Westfield Ins. Co., 699 N.E.2d 769. 773 (Ind.Ct.App.1998). Judge Bailey dissented. See id. at 774-75.

The parties' arguments turn on the construction of the policy language, and there is no factual dispute. Accordingly, this is a proper case for summary judgment and our standard of review is de novo.

The Boseckers claim that the trial court erred in granting summary judgment for Westfield because the insurance policy is ambiguous and should be construed broadly to include the property as "Covered Property." They base their claim on specific language in the policy that included the property on the declarations page and the "in the course of repair" language which they contend covered the property at the time of the fire because repairs were imminent. Westfield responds that the trial court's grant of summary judgment was proper because the policy required "Covered Property" to actually be under repair or reconstruction, not merely designated for that purpose.

Contracts of insurance are governed by the same rules of construction as other contracts. See Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985)

. The proper interpretation of an insurance policy, even if it is ambiguous, generally presents a question of law that is appropriate for summary judgment. See Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997); Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992). An ambiguity exists where a provision is susceptible to more than one interpretation and reasonable persons would differ as to its meaning. See Eli Lilly, 482 N.E.2d at 470; see also Colonial Penn, 690 N.E.2d at 667. It is well settled that "[w]here there is ambiguity, insurance policies are to be construed strictly against the insurer" and the policy language is viewed from the standpoint of the insured. American States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind.1996); accord Erie Ins. Co. v. George, 681 N.E.2d 183, 191 (Ind.1997); Tate, 587 N.E.2d at 668.

Ambiguities are construed strictly against the insurer to further the general purpose of the insurance contract to provide coverage. Tate, 587 N.E.2d at 668. This is particularly true where, as in this case, the policy is not the product...