Questions of law versus questions of fact in determining coverage

One of the most confusing issues in cases involving coverage under insurance policies is what is a question of law and what is a question of fact.

Insurance coverage attorneys can easily cite dozens of cases that state that the interpretation of an insurance contract is a question of law and that whether there is coverage based on the application of facts to policy language is a question of law. We can cite as many cases that discuss burdens of proving coverage or lack of coverage under different parts of a policy. While a burden of proof makes sense where facts are disputed--the burden thus being to prove a fact which would show or negate coverage--many decisions cite burdens of proof where facts are undisputed--and therefore coverage should be a question of law.

The confusion tends to result from sloppy drafting--or thinking--by judges, but it is repeated so often that clear analysis has become virtually impossible.

The issue was brought to my mind by a recent Superior Court decision by Judge Fremont Smith. Cambridge Mut. Fire Ins. Co. v. Kiely, 2009 WL 4894491 (Mass. Super.) went to trial over whether the son-in-law of owners of a homeowners policy was a resident of their household, and therefore covered by the policy.

Judge Fremont-Smith declined to decide the issue as a matter of law, because the Supreme Judicial Court has held that whether a person is a "member of a household" of an insured is "a complex decision requiring a case-by-case analysis and a balancing of all relevant factors."

Judge Fremont-Smith concluded, based on the credible evidence at trial, that the son-in-law was a member of the insureds' household. It may be that, although the decision does not make it clear, the evidence was disputed. For example, Judge Fremont-Smith cited the financial arrangements between the son-in-law and the insureds, including that the son-in-law paid rent to the insureds. If the insurer offered contrary evidence that no rent was paid, then the question of payment of rent was a question of fact. But if the evidence with respect to payment of rent was undisputed, and all the insurer offered was different undisputed facts that it believed would tend to dictate against the son-in-law being a member of the household, then Judge Fremont-Smith should have decided the case as a question of law.