Policy Language Trumps Expectation of Insureds

The expectation of an insured does not lead to coverage where an insurance contract clearly excludes coverage.

In Weiss v. NJ Manufacturers Insurance Company, plaintiffs sought insurance coverage for damage to their property caused by an oil spill from their underground fuel storage tank.  Their homeowner’s policy excluded coverage for property damage to property owned by the insureds.  Rather, it only covered damage to a third-party.  Plaintiffs argued that they had a reasonable expectation that their policy covered the cost of cleaning up an oil leak on their property, even if the damage did not extend to their neighbor’s property. Plaintiff also asserted that the policy was ambiguous, and shoulder be read in their favor.

The New Jersey Appellate Court found that, under its clear terms, the policy did not cover the cost of cleanup performed by or on behalf of an insured on its own property when those costs are incurred to alleviate damage to the insured’s own property and not the property of a third-party.

This decision highlights the importance of reading your policy.  Notwithstanding expectations, your policy will not cover damage that is specifically excluded.

Thanks to Heather Aquino for her contribution to this post.