When denying coverage, insurers must deny based on the clear-cut language of the policy, exclusions and their exceptions.

In Anghel v. Utica Mutual Insurance Company, a water pipe froze and burst flooding the plaintiff’s premises.  Plaintiff filed a timely claim with her insurance company, but the company disclaimed coverage based on an exclusion precluding coverage for damages due to frozen pipes.  However, the exclusion stated that it did not apply to damage due to frozen pipes that were part of a fire protective system.  Plaintiff submitted evidence establishing that the pipe that burst was part of an automatic sprinkler system and, thus, was part of a fire protective system exempted from the exclusion relied on by the insurer.  The insurer submitted an affidavit from an expert who examined the property and determined that the fire sprinkler system pipe ruptured due to the expansion of freezing water, but the defendant failed to address whether or not the pipe that burst was part of the sprinkler system.  In deciding respective summary judgment motions, the court noted that unambiguous terms of an insurance contract must be given their plain and ordinary meaning, and whenever an insurer wishes to exclude certain coverage from its policy obligations, it must do so in clear and unmistakable language.  Therefore, the court concluded that the plaintiff was entitled to summary judgment on the issue of liability because her claim fell within the parameters of the policy.

Insurers must carefully analyze the policy exclusions and their exceptions, and ensure that their experts address all pertinent issues when it comes to disclaiming coverage.  Failure to do so will have the court finding in favor of coverage.

Thanks to Moya O’Connor for her contribution to this post.