A Pennsylvania couple is taking their insurance company to court after their water damage claim was denied in a way they say doesn’t add up. Sean and Erika Sherwood filed a lawsuit against Farmers’ & Mechanics’ Mutual Insurance Company in mid-February 2026, accusing the insurer of wrongly labeling their damage as vandalism to avoid paying the claim.
The Sherwoods bought a property in Pleasant Gap, Centre County, Pennsylvania, in October 2025. They planned to fix it up and either rent it out or sell it. From the start, the insurance company knew the home was under construction, and the couple had a dwelling insurance policy in place.
On December 11, 2025, water damage occurred after a water supply line was left open. The Sherwoods quickly reported the problem but admitted they weren’t sure if the line was opened by accident or on purpose. About three weeks later, the insurer denied their claim. Farmers’ & Mechanics’ said the damage was vandalism and asserted the house had been vacant for more than 30 days, which would exclude coverage under their policy.
The Sherwoods say there’s no proof the damage was intentional. They say the insurance company used the vandalism claim as an excuse to deny a valid loss. What makes this case interesting is the policy wording. The insurer’s policy states they won’t cover vandalism, burglary damage, or glass breakage if the home was vacant for over 30 days. But the policy also specifically says a residence being built isn’t considered vacant.
The Sherwoods argue that since they were renovating the house when the damage happened, it clearly wasn’t vacant. The policy doesn’t define “being built,” but Pennsylvania law says unclear terms in insurance policies should be taken by their ordinary meaning. Standard dictionary definitions of “build” cover renovation and improvements, not just new construction.
Their lawsuit claims the insurer ignored its own rules, didn’t investigate properly, and focused more on protecting its money than doing right by the policyholders. The Sherwoods are seeking over $150,000 in damages, plus additional amounts for punitive damages, legal fees, and interest under a bad faith claim.
For now, the case is in the early stages with no final decision yet. It highlights the kind of disputes that can arise around insurance coverage during home renovations and left some professionals watching closely.