Undefined Policy Term Not Ambiguous (NJ)

Undefined phrases in insurance policies can lead to confusion and ambiguity.  The court dealt with this issue in Lubik v. Harleysville Insurance Company and ruled in favor of the carrier.

Lubik owned unit 800 in a condominium complex and water from unit 100 leaked into his causing $60,000 in damages.  Lubik had a Perils Insured Against policy that covered specified damage to his residence.  According to the policy, coverage did not include loss caused by accidental discharge or overflow that occurred off the “described location,” but the policy did not define this term.

Lubik filed a claim with Harleysville seeking coverage for the water damage and Harleysville denied coverage stating that the water came from off the “described location.”  Harleysville eventually moved for summary judgment on this issue and the trial court granted the motion finding that the described location in the clause of the Perils Insured Against section clearly, only referred to Lubik’s specific unit.  Lubik appealed arguing that described location means the entire condominium building.  The appellate court ruled that the clause was not ambiguous and that summary judgment was appropriate since Lubik did not meet his burden of proving that the claim was within the basic terms of his policy.

Special thanks to Heather Aquino for her contribution to this post.  For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.