McFarland v. Liberty Insurance CorpAnnotate this Case
Appellants Ryan and Kathryn McFarland owned real property in Garden Valley, Idaho, which feathred three structures insured through Liberty Mutual Insurance Group: a main cabin; a detached garage with an upstairs “bonus room”; and a pump house containing a geothermal well. The policy provided two types of coverage for structures. Coverage A (“Dwelling Coverage”) provided up to $188,500 in coverage for “the dwelling on the ‘residence premises’. . . including structures attached to the dwelling . . .” and Coverage B (“Other Structures Coverage”) provided up to $22,350 for “other structures on the ‘residence premises’ set apart from the dwelling by clear space.” In February 2017, a radiant heater burst in the bonus room and damaged the garage and its contents. After the McFarlands filed a claim, Liberty stated that the damage was covered under the policy. Believing the damage to fall under the Dwelling Coverage, the McFarlands hired contractors to repair the damage. However, after Liberty paid out a total of $23,467.50 in March 2017, Liberty stated that the coverage was exhausted because the damage fell under the Other Structures Coverage. This led the McFarlands to sue, alleging among other claims, breach of contract based on Liberty’s interpretation of the policy. The parties filed cross motions for summary judgment on the issue of whether the damage fell under the Dwelling Coverage or the Other Structures Coverage. Ruling that the policy unambiguously provided coverage for the garage under the Other Structures Coverage, the district court denied the McFarlands’ motion and granted Liberty’s. The McFarlands appealed. Finding that the policy at issue here failed to define the term "dwelling", and the term was reasonably subject to differing interpretations, the Idaho Supreme Court reversed the award of summary judgment and remanded for further proceedings.