Last week, the Sixth Circuit Court of Appeals affirmed a ruling denying insurance coverage to a homeowner for damages resulting from a fire when a medical-marijuana operation inside the home caught fire. The case, Nationwide Mut. Fire Ins. Co. v. McDermott (Feb. 24, 2015), revolved around whether coverage for property damage under a homeowner’s policy was properly denied because of the owner’s failure to inform the insurer of her husband’s operation of a medical-marijuana grow and distribution facility inside her home. The Court answered that question in the affirmative, finding that the policy required the homeowner “to notify [Nationwide] as soon as possible of any change which may affect the premium risk under th[e] policy,” including, but not limited to, “changes … in the occupancy or use of the residence premises.” (emphasis in the original).
According to the homeowner, the policy language was never intended to require her to inform her insurance company of every possible change in the use or occupancy of her home. The insured argued that, under the insurer’s interpretation, homeowners would be required to notify the insurer anytime they invited guests over to stay at the home, or introduced a new house plant. The Sixth Circuit didn’t buy this hypothetical: Continue Reading Up in Smoke: Insured Cannot Recover Damages Caused by Fire from Home Medical-Marijuana Operation