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Chapter 1. Asset Protection > Homeowners Insurance

Homeowners Insurance

Homeowners insurance can protect you from losses due to fire, smoke, water, wind, hail, rain, theft, vandalism or even pestilence. Well, maybe not pestilence, but it does cover a great many things beyond mere physical damage to your home; it may, for example, provide insurance coverage if the mailman slips and falls at your door.

The extent to which a homeowners insurance policy may be stretched was illustrated by a decision of the Federal Eighth Circuit Court of Appeals (State Farm Insurance v. Burton J. Ewing), in which it interpreted Minnesota law to provide for insurance coverage under a homeowners insurance policy when the homeowner’s mentally ill son killed the homeowner’s daughter. The man, who suffered from bipolar and schizoaffective disorders, lived in a cabin that his mother owned. The sister lived with her mother. During a psychotic episode the man went to his mother’s house and killed his sister.

At his murder trial, the man was found not guilty by reason of insanity. Although he was not held criminally responsible, the dead woman’s executor sued the man for wrongful death and looked to the mother’s homeowners insurance policy for coverage. The insurance company, not surprisingly, tried to deny coverage, saying that the murder did not constitute a covered occurrence under the mother’s homeowners policy because it was not an accident.

The court, however, disagreed, saying that because the man was pronounced to be mentally ill, he could not possess the ability to control his conduct regardless of any understanding of the nature of the act or its wrongfulness. The court went on to say that because he lacked the ability to control his conduct, the bludgeoning to death of his sister was both unexpected and unintended and therefore qualified as an accidental occurrence, which would be covered under the mother’s homeowners insurance policy.



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