Elkins v. QBE Insurance Company, 3:11-cv-05150

Background

Elkins and wife sue QBE Insurance and CAU over denial of rental-income loss after Harbour Commons fire; policy issued to Harbour Commons Condominium; building and unit damages covered, but plaintiffs seek lost rent for their individual units; policy defines "you"/named insured as Harbour Commons; declaration lists Harbour Commons as insured; RCW 64.34 requires association insurance with unit owner liability rights; policy provides Community Income coverage limited to loss due to suspension of the association’s operations during restoration; association covenants require maintenance of fire and related insurance; court grants summary judgment favoring defendants and dismisses all claims.
The fire occurred January 15, 2009; QBE paid proceeds for building/unit damages; plaintiffs argue policy should cover loss of rental income to unit owners; defendants argue only the named insured’s community income is covered; court interprets policy as a whole and determines "community income" refers to losses of the named insured.
The opinion interprets the policy as to whether rental income losses fall within "community income"; the court notes the policy defines terms and uses "you" to refer to the named insured; damages to individual units are repaired via association coverage; direct and consequential coverages are confined to named insured; increased period of restoration coverage also refers to the named insured; court concludes no genuine issue of material fact and that coverage for rent losses does not extend to individual unit owners.
The court references that the association's insurance under the policy is intended to repair common areas and the units as trustee, not to provide personal income loss recovery to unit owners; the policy’s definitions and structure support limiting community income to the named insured; the state statutes and covenants require insurance for common areas, not individual owners’ rent losses.
The result is that the Plaintiffs’ claims fail as a matter of law, and CAU and QBE are entitled to summary judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is missing rent loss to individual unit owners covered as community income under the policy?	Elkins argue rent loss constitutes community income.	Policy limits community income to the named insured Harbour Commons.	No; community income limited to named insured.
Does the policy’s named-insured language defeat coverage for unit owners’ rental losses?	Policy should extend to individual owners as community components.	You/Named insured refers to Harbour Commons only.	Yes; named insured limitation controls.
Do RCW 64.34.352 and covenants require coverage of owners’ income losses?	Statute/covenants imply broader coverage for owners.	Statute requires association insurance; owners’ personal income losses are not mandated.	Statute/covenants do not create owner-level rent-loss coverage.

Key Cases Cited

Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567 (1998) (insurance contract interpretation; whole-policy approach)
Am. Nat’l Fire Ins. Co. v. B & L Trucking & Constr. Co., 134 Wn.2d 413 (1998) (meaning of policy terms; ambiguity rule favoring insured)
Allstate Ins. Co. v. Peasley, 131 Wn.2d 420 (1997) (anti-rewriting policy; clear/unambiguous language enforcement)
Trans Continental Ins. Co. v. Washing. Pub. Utils. Dist.'s Util. Sys., 111 Wn.2d 452 (1988) (ambiguous language resolved in insured’s favor; policy interpretation framework)
Batdorf v. Transamerica Title Ins. Co., 41 Wn. App. 254 (1985) (statutory interpretation in insurance context; policy construction constraints)
Vadheim v. Continental Ins. Co., 107 Wn.2d 836 (1987) (ambiguity and construction of policy terms in insurance disputes)