Plaintiff Needs Clear and Convincing Evidence of a Waiver

Vacant Property Condition Clear and Unambiguous

No one enjoys application of a contract provision when it costs them money. They like it less when the cost is due to a contract condition that is clear and unambiguous. People who are insured, especially in cases where they are insuring against the risk of loss of vacant property, should read the policy before complaining about the application of a restrictive condition. If they did, many lawsuits and appeals would be avoided.

In Mohammed Ashraf, M.D. v. State Auto Property and Casualty Insurance Company, No. 18-0382, State of West Virginia Supreme Court of Appeals (May 20, 2019) Mohammed Ashraf, M.D. appealed the order of the Circuit Court of Marion County granting the motion for summary judgment presented by the insurer (“State Auto”).


Ashraf is a medical doctor who also invests in real estate. He and his wife purchased a certain building in Fairmont, West Virginia, in 1997 at a tax sale. The building had previously been converted from a private home to an assisted living facility and petitioner and his wife continued to operate it as such until 2006, when they closed the business. Thereafter, petitioner’s efforts to rent out the building did not materialize and the building became vacant.

In 2009, the building was broken into and vandalized. At the time, the building was covered by an insurance policy by State Auto.

Policy Condition

The policy provided: “Vacancy ¶ . . . . b. Vacancy Provisions ¶ If the building where loss or damage occurs has been vacant for more than 60 consecutive days before that loss or damage occurs ¶ (1) We will not pay for any loss or damage caused by any of the following even if they are Covered Causes of Loss: ¶ (a) Vandalism; … ¶ (2) With Respect to Covered Causes of Loss other than those listed in b.(1)(a) through b.(1)(f) above, we will reduce the amount we should otherwise pay for the loss or damage by 15%.”

Ashraf reported the incident to State Auto, which investigated and learned that the building was vacant and had been vacant since 2006. State Auto denied coverage, advising Ashraf in 2009 that the claim was for an uncovered loss: vandalism. Following the 2009 loss, State Auto continued to reissue, and petitioner continued to repurchase, the policy for the vacant property. Over the years, the insurance premium and the amount of coverage on the vacant structure both increased.

On October 29, 2012, the building was damaged by fire and was a total loss. State Auto determined that the fire was caused by an incendiary act. By letter dated November 15, 2012, State Auto advised Ashraf that it was proceeding under a reservation of rights regarding the fire loss claim because the subject property was alleged to be vacant and, therefore, subject to cancellation or a 15% reduction of the policy limit. State Auto canceled the subject policy on November 21, 2012. On December 18, 2012, the subject property, already a total loss, sustained a second fire.

Ultimately, State Auto determined that a fire loss qualified as a covered cause of loss and paid petitioner for a total loss of the building. However, because the building was “vacant” at the time of the fire, pursuant to the policy’s vacancy provision, State Auto reduced the amount it would “otherwise pay” by 15%.


Ashraf sued seeking a declaratory judgment as to the stated value policy, arguing that the policy’s 15% coverage reduction provision violates West Virginia Code § 37-17-9 (Count I), and, as to coverage for pollutant removal, arguing that he is entitled to coverage for asbestos removal (Count II). Petitioner also filed claims for violations of the Unfair Trade Practices Act, West Virginia Code § 33-11-4(9), and first-party bad faith (Count III), the tort of outrage (Count IV), and negligence on the part of Wells Fargo Insurance Services of West Virginia (“Wells Fargo”) (Count V).

The circuit court granted State Auto’s motion for summary judgment.


The Supreme Court was asked to conclude that State Auto waived the application of the policy’s provision that reduced coverage on the building by fifteen percent because the building was vacant at the time of the fire. In West Virginia, to effect a waiver, there must be evidence which demonstrates that a party has intentionally relinquished a known right. Furthermore, there is no requirement that an insured have detrimentally relied upon an insurer’s previously stated reason(s) for denying coverage in order to assert waiver to prevent the insurer, in subsequent litigation, from asserting other, previously unarticulated reasons for denying coverage. Rather, the insured must show, by clear and convincing evidence where waiver is implied, that the insurer intentionally and knowingly waived the previously unarticulated reason(s) for denying coverage.

Ashraf argued that State Auto impliedly waived the vacancy provision by continuing to renew the insurance policy after it became aware, at the time of the 2009 vandalism claim, that the building was vacant.

The West Virginia Supreme Court has long held that “‘[w]here the provisions of an insurance policy contract are clear and unambiguous . . . full effect will be given to the plain meaning intended.’ Syl., [in part,] Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714 (1970).” Syl. Pt. 5, in part, American Nat’l Prop. & Cas. Co. v. Clendenen, 238 W. Va. 249, 793 S.E.2d 899 (2016).

In 2009, upon learning that the building had been vacant for more than sixty consecutive days, State Auto invoked the clear and unambiguous language of the policy’s vacancy provision, which enumerated six reasons for denial of coverage, including vandalism. State Auto expressly advised petitioner of the same, in writing, and denied coverage. When petitioner’s still-vacant building sustained a fire loss (a covered loss under the policy) in 2012, State Auto again invoked the clear and unambiguous language of the vacancy provision by “reduc[ing] the amount [it] should otherwise pay for the loss or damage by 15%.”

Although the written notice denying the vandalism claim did not specifically quote from the policy the notice expressly referenced the full condition. Ashraf had a duty to read the coverage reduction provision, as directed by State Auto. Ashraf’s claim that the 2009 notice was inadequate to advise him of the coverage reduction provision and amounts to a waiver of the application of the provision in this case was unavailing.

Therefore the circuit court did not err in concluding that petitioner failed to present clear and convincing evidence that State Auto intentionally relinquished its right to invoke the vacancy provision that reduced coverage for petitioner’s fire loss by fifteen percent. The court correctly determined that the doctrine of waiver did not apply in this case.


Waiver can seldom be implied since the law requires it be a knowing relinquishment of a right available to the person claimed to have waived that right. By denying a vandalism claim in full – because of the vacancy clause – there was no reason to advise the insured that if there was a fire loss and that it would be covered subject to a 15% penalty off the top of the total claim is not a waiver. The insurer, by referring the insured to the entire condition when it denied the vandalism claim, it became obvious that there was no intentional waiver of the 15% penalty.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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