Section I- LOSSES INSURED
COVERAGE A- DWELLING
We insure for accidental direct physical loss to the property described in Coverage A, except as provided in SECTION I-LOSSES NOT INSURED.
COVERAGE B –PERSONAL PROPERTY
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in SECTION I- LOSSES NOT INUSRED:
1. Fire or lightning
10. Falling objects. This peril does not include loss to property contained in a building unless the roof or an exterior wall of the building is first damaged by a falling object. Damage to the falling object itself is not included.
SECTION I – LOSSES NOT INSURED
1. We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one r more of the perils listed in items A. through n. below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:
3. We do not insure under any coverage for any loss consisting of one or more of the items below. Further, we do not insure for loss described in paragraphs 1. and 2. Immediately above regardless of whether one or more of the following: (a) directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before, at the same time, or after the loss or any other cause of the loss:
a. conduct, act, failure to act, or decision of any person, group, organization or govern-
mental body whether intentional, wrongful, negligent, or without fault;
But the last paragraph in this section does state:
However, we do insure for any resulting loss from items a., b. and c. unless the resulting loss is itself a Loss Not Insured by this section.
So, I would say you would pay for the loss but then again depends on how the company interpreted the policy. Reason I would pay for is due to fire is a covered peril in the H0-3 Policy and ISO Form nothing prohibits paying the loss that I have found.
Another thought this is California and they have the Fair Claims Settlement Regulations this is the one for fire:
Section 2695.9. Additional Standards Applicable to Fire and Extended Coverage Type Policies with Replacement Cost Coverage
(a) When a fire and extended coverage insurance policy provides for the adjustment and settlement of first party losses based on replacement cost, the following standards apply:
(1) When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible.
(2) When a loss requires replacement of items and the replaced items do not match in quality, color or size, the insurer shall replace all items in the damaged area so as to conform to a reasonably uniform appearance.
NOTE: Authority cited: Sections 790.10, 12921 and 12926 of the California Insurance Code and Sections 11342.2 and 11152 of the California Government Code. Reference: Sections 790.03(h)(3), (5) and (7) of the California Insurance Code.
Tom this is how I see it...