Segregating Damages In Hail Storm

Attorneys who handle hail damage claims have to know the law discussed in this Northern District, Dallas Division opinion.  The opinion is styled, One Way Investments, Inc. vs. Century Surety Company, et al.

This is a summary judgment case for breach of contract.  One Way had property insurance with Century and made a claim for damages alleged to have happen in a severe hail storm that caused significant damage to the roof and appurtenances and interior of One Way’s property.

Century’s adjuster estimated the cost of repairs to be $2,372.43, which was less than the amount of One Way’s deductible and resulted in One Way filing this lawsuit.

Century maintains that the insurance policy does not cover damage or loss to the property due to wear and tear; there is no evidence from which a jury could allocate covered loss (due to wind and hail) from non-covered loss (due to wear and tear); there is no expert testimony that the property damage was caused by wind and hail; there is expert testimony that the property damage was caused by wear and tear and improper construction; and there is evidence establishing that the alleged cost of repairs is reasonable and necessary.

It is undisputed that Texas law applies to this case.  An insured cannot recover under an insurance policy unless the insured pleads and proves facts to show that its damages are covered by the policy.  Although an insured who suffers damage from both covered and excluded perils is not precluded from recovering, when covered and excluded perils combine to cause an injury, the insured must present evidence affording the jury a reasonable basis on which to allocate the damage.  Because an insured can only recover for covered events, the burden of segregating the damage attributable solely to the covered event is a coverage issue for which the insured carries the burden of proof.  It is essential that the insured produce evidence which will afford a reasonable basis for estimating the amount of damage or the proportionate part of damage caused by a risk covered by the insurance policy.  Failure to segregate covered and non-covered perils is fatal to recovery.

One Way has not produced any evidence that would enable a reasonable jury to estimate the amount of damage or the proportionate part of damage caused by a covered cause – i.e., hail and wind.  Even if the court were to consider reports offered by One Way, the reports only provide estimates of the cost to repair the property and some evidence that the property was damaged by hail.  The reports do not provide evidence from which a reasonable jury could allocate damage from wear and tear, poor construction, or any other causes, on the one hand, and allocate damage from wind and hail, on the other hand.  Accordingly, because One Way did not create a genuine fact issue concerning whether its alleged damages are covered by the policy, One Way is entitled to summary judgment.