Washington Case Update: Washington Court of Appeals Sides with Insurer in Dispute Over How Much a Church Was Entitled to in Compensation Under its Policy Following A Fire

Washington Case Update: Washington Court of Appeals Sides with Insurer in Dispute Over How Much a Church Was Entitled to in Compensation Under its Policy Following A Fire

From the desk of Tasha Lyn CosimoWhen a structure burns down and is covered by an insurance policy, the insured is generally entitled to receive compensation for the value of the structure or compensation that would allow the insured to rebuild the structure. Although insurance policies vary, how is the amount owed to an insured after a fire determined? If costs associated with the rebuild are less than the original estimate, is the insured entitled to receive the full amount of the estimate? Read on to find out.

Case Pointer: After a fire caused significant damage to the Mt. Zion Lutheran Church in Mountlake Terrace, Washington, Mt. Zion sought coverage under its insurance policy with Church Mutual Insurance Company. The insurer accepted coverage, and agreed upon an estimated reimbursement that it would provide to Mt. Zion at the completion of the rebuild. After the rebuild was completed, the total cost was less than that of the estimate. Accordingly, the insurer paid only those amounts that were actually spent on the rebuild. Mt. Zion sued for the full amount and the insurer won summary judgment at the trial level. The Washington Court of Appeals affirmed, holding that the policy at issue did not obligate the insurer to pay any costs associated with Mt. Zion’s rebuild that were not actually expended and necessary.

Mount Zion Lutheran Church v. Church Mutual Insurance Company, No. 78107-3-I (Wash. Ct. App. Mar. 18, 2019).

During the night of May 7, 2014, a devastating two-alarm fire broke out and caused extensive damage to the Mt. Zion Lutheran Church in Mountlake Terrace, Washington (“Mt. Zion”). Mt. Zion suffered nearly $300,000 in damage and sustained smoke damage throughout the sanctuary. Mt. Zion maintained an insurance policy (the “Policy”) with Church Mutual Insurance...

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