Sometimes when marriages go sour and spouses can no longer get along with one another, one spouse whose emotions have taken over them might do something out of anger to harm the other spouse, such as deliberately setting fire to their home. So what happens to you ability to bring an insurance claim if your spouse deliberately sets fire to your home.
In Kulubis v. Texas Farm Bureau Undw’rs Ins. Co., 706 S.W.2d 953 (Tex. 1986), the Texas Supreme Court first recognized what is known as the innocent spouse exception to otherwise non-covered insurance claims. The innocent spouse doctrine usually involves cases of arson or other intentional destruction of property by one spouse and a claim for insurance coverage by the other who was unaware and did not participate in the conduct. In applying the innocent spouse doctrine courts usually hold that if the house and contents are owned equally by the husband and wife, then the innocent spouse would be entitled to the insurance proceeds covering one-half the property while the other culpable spouse would be denied any recovery.
In Kulubis, the court reasoned that the innocent spouse had a reasonable expectation of coverage, based on the policy terms, that would be defeated if his or her spouse’s conduct deprived that spouse of coverage. The facts of Kulubis were the husband destroyed the couple’s mobile home after his wife served him with divorce papers. The wife was not only innocent, she was the intended victim of his actions. The court stated that adopting the innocent spouse doctrine will best protect the insurance company from fraud while assuring that the insurance company will not be unjustly enriched. It will also permit an innocent victim whose property has been destroyed to collect under an insurance policy for a loss reasonably expected to be covered.
However, the Supreme court did not address the effect of the Concealment of Fraud provision that is common in most insurance policies when there is one complicit and one innocent insured.
The effect of the Concealment of Fraud provision on the innocent spouse doctrine was discussed in McEwin v. Allstate Texas Lloyds, 118 S.W.3d 811 (Tex. App.–Amarillo 2003, no pet.). In McEwin, the home was insured under an insurance policy that designated both the husband and wife as named insureds in the policy. During the investigation of the claim it was uncovered that the husband had instigated the fire. The wife was uninvolved and had no knowledge of his plans to burn the property. The McEwins submitted a proof of loss that did not address the cause of the fire. The insurance company paid off the mortgage company, but denied the McEwins’ claim based on arson and on the Concealment or Fraud provision of the policy.
After the denial, the wife sued Allstate asserting that she was entitled to benefits as an innocent spouse relying on Kulubis. She also claimed that Article 21.19 of the Texas Insurance Code resulted in the Concealment or Fraud policy clause being ineffective to void the policy unless Allstate proved that it waived or lost a valid policy defense by making the payments it made. The court disagreed and granted summary judgment to the insurance company.
In doing so, the court reasoned that the innocent insured doctrine did not supersede other policy provisions. The court stated that because the Concealment or Fraud provision voided the policy as to the named insured and any other insured, if any insured made an intentional misrepresentation there could be no coverage for the innocent spouse. The court also said that the language of Article 21.19 according to their plain and common meaning do not purport to make provisions of the Concealment or Fraud clause of no effect to the extent the provision voids the policy for fraud which is not based on material misrepresentations in the proof of loss. The court stated that in this case the husband’s deceptive actions in (1) causing the house to be intentionally burned, and (2) filing a loss report without disclosing his complicity in the fire were a fraudulent and the claim was barred.
As a result of McEwin the innocent spouse doctrine may have suffered a set back as a result of the court’s construction of the Concealment of Fraud provision of the policy, but the Texas Supreme Court has yet to directly address the issue specifically so it remains to be seen where the innocent spouse doctrine is still alive in Texas.
At The Law Office of Stephen O’Rear, P.C. we help people who have insurance disputes.
DISCLAIMER Information in this article is proved for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. This firm does not represent any person unless and until it is retained and agrees to provide such representation in writing.