| Q&A of the Week |
No Coverage for Leaky Roof
A Florida subscriber recently asked the following question:
How are others handling this situation or how do you feel the policy should respond to this? We feel bad for our customer, who is the tenant.
The tenant, who was insured under a 1989 Businessowners policy, suffered damage to business personal property due to a roof leak from wear, tear, and deterioration. The form states that we do not owe for this loss and would owe only for the ensuing damage if is a specified peril, but water from a roof leak is not a specified peril.
This means our insured, through no fault of his own, is penalized from coverage under his own policy. He can certainly file a liability claim against the landlord's policy, but that can cause animosity.
Just wondered if you saw any other way to help our customer, other than pick a landlord who is accountable and maintains his building.
ANSWER: There is nothing on the policy that would help the insured. The lease should indicate who is responsible for maintaining the roof, but whether it is the landlord or the tenant, there is no way to insure against wear and tear or poor maintenance. If the landlord is responsible, it becomes a liability claim or legal issue.
|
| |
| Litigation Watch |
Smoke from Fire Not a Pollutant
This appeal arises from an action filed by the plaintiffs seeking to recover under the landlord's commercial general liability insurance policy for alleged injuries that occurred following a fire in the apartment complex where the plaintiffs lived. This case is Hobson v. Indian Harbor Ins. Co., Docket No. 316714, 2015 WL 1069242 (Mich. App. March 10, 2015).
The apartment building in which the Hobsons lived was insured under a CGL form that contained a total pollution exclusion. The original complaint filed by the Hobsons averred that one of the landlord's employees set a fire due to negligence and this fire injured the Hobsons and caused them damage. When the insurer of the building denied coverage, the plaintiffs then filed a lawsuit against the insurer.
The insurer said that the alleged injuries suffered by the Hobsons included smoke inhalation, and the total pollution exclusion barred coverage. The Hobsons countered that the pollution exclusion did not bar coverage since the exclusion clearly contemplates pollution as a substance that was confined and then released, something distinctively apart and different from a fire—a fire that in this instance was caused by negligence on the part of an insured, which then generated combustion and its natural by-products.
The insurer filed a motion for summary judgment and the trial court denied the motion. This appeal followed.
The court noted that the resolution of this case turns on whether the pollution exclusion applied to bar coverage for the alleged bodily injuries. The court found that the pollution exclusion in this case was intended to eliminate all pollution claims. However, the Hobsons did not allege that their injuries were caused by a pollutant. Instead, they argued that negligence on the part of the insured's employee gave rise to their injuries, specifically a fire set due to the negligence of an employee. Thus, the court said, the injuries were not caused in whole or in part by a pollutant that was discharged, dispersed, released, seeped, migrated, or escaped; rather, the injuries arose from the negligence of the insured, which resulted in a fire.
The insurance company contended that the Hobsons suffered smoke inhalation and so, the injuries were barred by the pollution exclusion since the definition of a pollutant included smoke. The insurer attempted to separate smoke from the fire and in so doing, said the court, tried to extend the scope of the pollution exclusion beyond the scope of its original intent and beyond the plain meaning of the policy language. The court found that it was impossible to separate smoke from fire in instances where fire breaks out within the premises of the insured. Because the fire was located in the premises of the insured where the Hobsons resided, under the plain meaning of the policy terms in the exclusion, the insurer cannot show how the plaintiffs were injured in whole or in part by a discharge, dispersal, seepage, migration, release, or escape of a pollutant.
The court said that the injuries suffered by the Hobsons were not caused by smoke that passed, flowed, or oozed gradually into the apartment complex, but instead, the smoke was there with the fire when the fire started. The smoke was attached to the fire that started inside the building where the Hobsons were physically located. The court noted that the insurer wanted it to hold that any pollutant involved in the causal chain negated the insurer's liability, but to do so, the court continued, would ignore the context in which the pollution exclusion was written and to extend it far beyond its plain meaning.
The ruling of the trial court was affirmed.
Editor's Note: The court ruled that its finding that the injuries were caused by smoke from a fire and that smoke in this instance was not a pollutant was consonant with the understanding of the average purchaser of insurance and consistent with the provisions of the insurance policy as a whole. The court held that the pollution exclusion was designed to exclude coverage for traditional environmental harms, and this claim did not fit that design. |
| |
|
|
|
| Subscribe to FC&S |
| FC&S Online is the unquestioned authority on insurance coverage interpretation and anlaysis for the P&C industry. FC&S offers unbiased analysis and interpretation and keeps you current on the latest ISO and AAIS revisions. Providing instant access to the very latest information, FC&S is the resource that agents, attorneys, brokers, risk managers, underwriters, and adjusters rely on to research commercial and personal lines coverage issues. |
| • |
Quickly and accurately determine coverage under a policy at the time of loss |
| • |
Research coverage issues and interpretations, including court cases |
| • |
Access experts live to discuss specific situations |
| • |
Find answers to questions based on real-world claims disputes |
| • |
View and print ISO forms |
| • |
Access updates on breaking litigation and bureau developments |
 |
|
| |
| Join Us Live! |
| FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@ SummitProNets.com, for more information. They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer. |
| |
| Contact Us |
As always, your comments and questions are welcome.
Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2246
Email: eAlerts@nuco.com |
| |
|
