In Carrico v. Stillwater Ins. Co., 23-CV-349-RAJ, 2024 WL 308106 (W.D. Wash. Jan. 26, 2024), the Western District of Washington thought-about competing motions for partial abstract judgment in a property harm case involving a winter storm, the place giant quantities of rain and melted snow backed the drain up and the pressure of the water pushed via the outside door inflicting harm to all the basement stage. At situation within the case was the applying of the coverage’s put on and tear exclusion and its exceptions.
The insurance coverage coverage coated direct bodily loss however contained an exclusion for bodily harm brought on by put on and tear, marring or deterioration. The wear and tear and tear exclusion included sure exceptions, which, if relevant, would reinstate protection. Particularly, the exclusion contained exceptions for: (1) discharge or overflow from storm drains, water, steam, or sewer pipes which might be off of the residence premises; and (2) discharge or overflow from plumbing, heating, air-con, or different comparable programs on the residence premises. The coverage expressly excluded water harm brought on by “floor water … all whether or not or not pushed by wind, together with storm surge” and water which “[b]acks up via sewers or drains.” The Restricted Water Again-up and Sump Discharge Or Overflow Protection endorsement added again restricted protection for water which “[b]acks up via sewers or drains” as much as a $5,000 sublimit.
The defendant, Stillwater Insurance coverage Firm (“Stillwater”) decided there was protection beneath the Restricted Water Again Up and Sump Discharge or Overflow Protection endorsement and issued cost of the total $5,000 sublimit of that endorsement, along with a letter to the insureds explaining its protection evaluation. The insureds employed a plumber who decided that put on and tear to a drain entice close to their basement door brought about the drain to turn out to be inoperable and demanded the total coverage limits, finally submitting swimsuit in opposition to Stillwater for Breach of Contract, Insurance coverage Dangerous Religion, Violation of the Shopper Safety Act (“CPA”), and Violation of the Insurance coverage Honest Conduct Act (“IFCA”).
The Courtroom was tasked with adjudicating competing motions for partial abstract judgment. The insureds filed a Movement for Partial Abstract Judgment on their declaratory judgment, breach of contract, and CPA claims and Stillwater filed a Movement for Partial Abstract Judgment as to breach of contract declare.
The insureds contended that the loss resulted from put on and tear to a plumbing system, falling beneath the exception to the damage and tear exclusion within the coverage. The insureds tried to outline “plumbing system” broadly to incorporate the drain entice, utilizing the Uniform Plumbing Code and the deposition testimony of Stillwater’s adjuster. The insureds additionally sought partial abstract judgment on their CPA claims, alleging violations of laws akin to failure to pay claims with out cheap investigation, failure to reveal coverage advantages coverages and coverage provisions, failure to offer an affordable rationalization for denial, and improper denial of claims beneath particular coverage provisions or exclusions.
Stillwater maintained that the exception to the damage and tear exclusion didn’t apply on this case. Counting on the peculiar, dictionary that means of “plumbing system” drain, Stillwater argued that the drain was designed to maintain rainwater outdoors the home and didn’t concern the distribution or use of water inside the insureds’ residence.
In contemplating the respective motions for partial abstract judgment, the Courtroom discovered that there was no protection beneath the exceptions to the damage and tear exclusion. The primary exception to the damage and tear exclusion wouldn’t apply as a result of the loss occurred on the residence premises. There was additionally no foundation for concluding that the water harm resulted from an overflow from a “plumbing system,” beneath the second exception. The Courtroom emphasised that undefined phrases in insurance coverage insurance policies are interpreted based mostly on their peculiar that means or widespread legislation definitions. Consequently, the pipe was discovered to not be part of the home’s “plumbing system” and partial abstract judgment was entered in favor of Stillwater on the insureds’ breach of contract declare.
Concerning the insureds’ CPA claims, given the proof introduced, the Courtroom decided that Stillwater’s actions didn’t violate related laws. Stillwater supplied the insureds with a abstract of the coverages accessible within the coverage and defined that protection was being prolonged beneath the coverage’s endorsement as much as the accessible sublimit. Due to this fact, the Courtroom denied the insureds’ movement for partial abstract judgment on the CPA claims.
Conclusion
This resolution underscores the significance of clear coverage language. Although the end result was favorable to the insurer, the case nonetheless makes clear that insurers ought to try and outline coverage phrases, the place practicable. For instance, the inclusion of the definition of the time period “plumbing system,” may have averted conflicting coverage interpretations. Moreover, the case is an effective instance of the significance of clear communication and transparency with policyholders concerning protection interpretations to mitigate potential disputes and guarantee compliance with regulatory requirements.
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