The carrier denied coverage, saying the building is appurtenant to the scheduled garage because it is closer to the garage, the activities usual to the house do not depend on the building, and the insured uses the building to avoid having to go back to the house to use the restroom.
Q: Should a 10-by-18-foot building that houses two bathrooms and sits 228 feet from the primary dwelling be covered as an other structure under a farm policy?
The insurer is denying coverage, stating that building is appurtenant to the scheduled garage because it is closer to the garage, the activities usual to the house do not depend on the building, and because the insured uses the building to avoid having to go back to the house to use the restroom.
Response 1: According to the policy language, coverage applies to a private structure at the insured location that the insured owns and is appurtenant to a covered dwelling.
The insurer is denying coverage based on a definition of “appurtenant" that is not supported by the policy language. According to the insurer, the bathroom building is appurtenant to the scheduled garage because:
- “It is closer to the garage." Nowhere in the policy is the distance between the dwelling and other structures at the insured location addressed or relevant to the issue at hand.
- “The activities usual to the house do not depend on the building." One activity usual to any house is using the restroom … this insured's primary activity at the “bathroom" building is just that!
- “The insured uses the building to avoid having to go back to the house to use the restroom." The insured doesn't go back to the garage to use the restroom. Instead, they use the bathroom building to conduct the restroom activity that they normally conduct in the dwelling.
The policy also has a list of appurtenant structures that are “not covered." The bathroom building is not included in this list of “not covered" appurtenant structures.
More appropriate definitions of appurtenant structures include: “something that belongs to, or goes with something else," according to Legal Dictionary, or “a legal term that means that something belongs to a larger, more valuable entity," according to Investopedia.
The bathroom building clearly belongs to or goes with the larger, more valuable dwelling. It is relatively easy to find coverage for the bathroom building in the policy language.
Response 2: There is no definition of “appurtenant" in the policy, so the common definition would be applied. That would be “belonging, or pertinent" to the dwelling.
You don't say how the building is used. Is it only for bathrooms? Who is using it? This farm shows several rental dwellings included, which may be used as housing for farm workers. Are the people using the bathrooms the farm workers when they are working in the fields or in other farm structures nearby?
If so, it would be hard to make the argument that it was “appurtenant" to the main dwelling. If the farm owner and their family are the ones using it, they must be away from the main dwelling or they would use the bathrooms in the house, correct? I tend to think the carrier makes a good argument here.
Any buildings used as part of the farming operation should be scheduled and a premium paid for them. If the bathrooms are related to the farming operation, then the building housing them should be listed. You don't mention what type of loss may have occurred, but going forward, I would suggest that the building be scheduled.
Response 3: That structure should be shown as a scheduled location. I recently learned of a claim denial for an appurtenant structure designed for an auto, but an all-terrain utility vehicle was under the cover at the time of loss. Schedule every structure on a farm policy.
Response 4: Appurtenant structure means a structure that is ordinarily connected to the use and enjoyment of a single‐family residence. Normal appurtenant structures include but are not limited to a garage, deck, storage shed, woodshed, pump house, retaining wall and fence.
This structure, like the garage, would be appurtenant to the dwelling. In no way would it be appurtenant to the garage. It wouldn't be covered if it were primarily used for farming purposes. If it were, it would need to be scheduled like the other farming structures.
Response 5: Many farm policies schedule each structure individually without an “other structures" provision that is common to homeowner policies. It sounds to me like it is a modern outhouse that is an independent farm structure unrelated to any other building. It should have been scheduled as a farm structure or included in the farm structures blanket limit. How was it listed in the insurance application?
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