A California appeals court's recent ruling that a fire set by a transient in a vacant house isn't vandalism constricts the application of the vacancy exclusion found in some property policies and potentially puts insurers on the hook for more risk than they bargained for, according to attorneys.

In a split decision, an appellate panel concluded that a Fire Insurance Exchange policy's exclusion for a loss from vandalism or "malicious mischief" doesn't apply to bar coverage for the destruction of a house by a fire started by a transient to keep warm because the fire wasn't set with malicious intent.

Transients commonly seek shelter in vacant properties in California, and the appellate court's ruling could be cited in support of the position that carriers should shell out for property damage that would otherwise be excluded from coverage if there is no evidence of an intent to cause harm, attorneys say.

David Wood discusses why this decision is important:

"A property is 'vandalized' when someone intentionally trashes it — not when someone accidentally sets it on fire, as happened here," said David Wood, co-managing shareholder of Anderson Kill PC's Ventura, California, office. "All the court had to do to decide coverage was to look up 'vandalism' in the dictionary, instead of doing a lot of legal research about other meanings of the term in irrelevant contexts.