| Q&A of the Week |
Plumbing Leak under Driveway
A Louisiana subscriber recently asked the following question:
This question involves a DWG 3 ISO policy. A toilet overflowed and caused interior damage. The plumber ran a camera and determined there was a break in the line under the driveway. Therefore, the plumber had to trench ten feet under concrete in order to repair the pipes and flush the system. We know the interior damage is covered, but is the trenching covered under the policy?
ANSWER: Yes, there is coverage. Coverage exists for overflow of a plumbing system on the described location, including tear out and replacement of any part of a building or other structure. The driveway is an other structure. |
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| Litigation Watch |
Carbon Monoxide Poisoning Not Covered under Texas Law
In this action, the insureds were denied coverage on the basis of the pollution exclusion in their commercial liability umbrella policy. The case is Shaw v. Liberty Mut. Fire Ins. Co., No. 6:15-CV-686-ORL-TBS, 2016 WL 561409 (M.D. Fla. Feb. 12, 2016).
While on vacation the Shaws spent the night at the Boardwalk Inn and Suites, in a first floor room located directly above the parking garage. During the night the Shaws were poisoned by carbon monoxide gas. Several grates that were designed to permit airflow into the parking garage for ventilation had been blocked, causing little airflow in the garage underneath the Shaw room, in turn causing carbon monoxide to concentrate and enter the room above. The Shaws alleged that as a result of the defendants' negligence they were "exposed to an environmental contaminant on the hotel premises" which was deemed to have caused carbon monoxide poisoning, and sought damages for breach of duty, failure to inspect, failure to warn, and failure to take action. At the time of the accident the hotel was owned and operated by Prism Hotel Company, which was insured by Liberty Mutual under a commercial liability policy. Coverage was denied based upon the pollution exclusion in the policy.
The court found that Texas, as opposed to Florida, law applies in this case.
The Shaws argued that the pollution exclusion is ambiguous and not applicable to their claim, and cited several policies and decisions that distinguished between pollutants and general irritants, but they failed to cite any Texas law that was applicable. Texas courts have consistently found that pollution exclusions using substantially the same language found in the hotel's policy are clear and unambiguous.
The Shaws also argued that carbon monoxide is a general irritant and not a pollutant, as it is a naturally occurring gas that is present in the air we regularly breathe. Texas law has generally held that carbon monoxide is a pollutant and courts in other states have reached the same result. The court found that although carbon monoxide is found in nature, it is toxic at the level of concentration that was experienced by the Shaws and clearly and unambiguously fits within the definition of a "pollutant" under the policy.
The court found for Liberty Mutual and granted its motion for summary judgment.
Editor's Note: The court in this case followed the trend of other decisions that Texas courts had made on the same issue. Had the plaintiffs been able to argue their case using Florida law, it being a Florida case, they may have seen a more favorable outcome. Unfortunately for the plaintiffs, the pollution exclusion is one that has seen much litigation, so the policy language and definitions have been analyzed ad nauseam, and have been specifically crafted to be clear and unambiguous. |
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| Fraud of the Week |
Auto Claim Fraud – Washington
AMOUNT: $6,670
A Washington man was sentenced to twenty-four hours of community service and a $1,000 fine for attempting to file a false insurance claim. The man's policy on his 2011 Ford F-150 had cancelled for nonpayment in April 2014. On April 14 he called the carrier to reinstate his policy. Shortly thereafter he called in a claim, saying he rear-ended another vehicle. However the metadata on the collision photos showed that the claim occurred before he reinstated the auto policy. He had filed a claim for more than $6,000 in damage to his truck and $670 to the vehicle he hit.
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