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People's Insurance Counsel Division v. State Farm Fire & Casualty Insurance Co.

Court of Special Appeals of Maryland

September 26, 2013

PEOPLE'S INSURANCE COUNSEL DIVISION
v.
STATE FARM FIRE AND CASUALTY INSURANCE COMPANY

Eyler, Deborah S., Zarnoch, Sharer, J. Frederick (Retired, Specially Assigned), JJ.

OPINION

Eyler, Deborah S., J.

During a blizzard in the winter of 2010, Moira and Gregory Taylor's carport in West River, Anne Arundel County, collapsed under the weight of ice and snow. They filed a claim under their homeowners insurance policy ("the Policy") with State Farm Fire and Casualty Insurance ("State Farm"), the appellee. State Farm denied the claim on the ground that the carport was not a "building" and that the Policy only covered losses due to collapse of buildings.

The Taylors filed a complaint with the Maryland Insurance Administration ("the MIA"), alleging that State Farm had violated Md. Code (1995, 2011 Repl. Vol.) section 27-303 of the Insurance Article ("Ins."), prohibiting unfair claim settlement practices, by "refus[ing] to pay [their] claim for an arbitrary or capricious reason based on all available information" or "fail[ing] to act in good faith" in settling their claim. Id. at §§ 27-303(2) and (9), respectively. The People's Insurance Counsel Division ("PICD"), [1] the appellant, intervened on behalf of the Taylors. Following a hearing before the Associate Deputy Commissioner of the MIA, the Insurance Commissioner ("the Commissioner") issued a final decision ruling that State Farm had not violated Ins. section 27-303. PICD filed a petition for judicial review of that decision in the Circuit Court for Baltimore City. The circuit court affirmed the final decision of the MIA.

PICD presents one question for review, which we have rephrased:
Was the MIA's decision finding that State Farm did not violate the Insurance Article when it denied the Taylors' claim legally correct and supported by substantial evidence in the record?

For the reasons to follow, we answer that question in the affirmative and shall affirm the judgment of the circuit court.

FACTS AND PROCEEDINGS

A. The Policy

We begin by setting forth the relevant Policy provisions. "SECTION I -COVERAGES" provides in pertinent part: COVERAGE A - DWELLING

1. Dwelling. We cover the dwelling used principally as a private residence on the residence premises shown in the Declarations.
Dwelling includes:
a. structures attached to the dwelling[.]
* * *
2. Dwelling Extension. We cover other structures on the residence premises, separated from the dwelling by clear space. . . .

(Emphasis in original.)

"SECTION I - LOSSES INSURED" states that the Policy covers "accidental direct physical loss to the property described in Coverage A except as provided in SECTION I - LOSSES NOT INSURED." (Emphasis added.) That section provides in relevant part:

1. We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through o. below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:
a. collapse, except as specifically provided in SECTION I – ADDITIONAL ...

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