Homeowner insurance policies can be difficult to interpret when it comes time to make a claim for benefits. This 5th Circuit Court of Appeals opinion provides some insight into how the courts review and interpret insurance policies. The case is styled Claudia Ayoub; Gerald C. Ayoub v. Chubb Lloyds Insurance Company of Texas.
The principal question presented in this dispute over a homeowner’s insurance policy is whether a section of the policy setting forth a “reconstruction cost less depreciation” standard for dwelling loss is a coverage provision, on which the insured has the burden of proof, or a limitation of liability provision, on which the insurer has the burden. The court also had to decide how insureds can prove market value under Texas law for personal items which may have no such thing. For the reasons discussed below, the court found that summary judgment in favor of the insurer was not warranted on either issue.
The Ayoubs’ own a home in El Paso. Prior to the loss in this case, it was worth in the neighborhood of $2 million. The home was insured under a “Texas Standard Homeowners Policy” issued by Chubb. Coverage A of the Policy insured the dwelling for up to $2,511,000. Coverage B insured personal property in the home for up to $1,506,600. At additional cost, the Ayoubs purchased replacement cost endorsements for both their dwelling and personal property.