Covered And Non-Covered Causes Of Loss

Insurance attorney need to stay current on the ways the Judges interpret the law and how that law is applied to the facts in a case.

When dealing with insurance contracts and the “covered and non-covered cause of loss” issue, this 2019, Northern District of Texas, Dallas Division opinion is worth reading.  It is styled, 2223 Lombardy Warehouse, LLC, et al. v. Mount Vernon Fire Insurance Company.

The policy language at issue in this case read:

Limitations On Coverage For Roof Surfacing

B. The following applies with respect to loss or damage by wind and/or hail to a building or structure[:] … We will not pay for cosmetic damage to roof surfacing caused by wind and/or hail. For the purpose of this endorsement, cosmetic damage means that the wind and/or hail caused marring, pitting or other superficial damage that altered the appearance of the roof surfacing, but such damage does not prevent the roof from continuing to function as a barrier to entrance of the elements to the same extent as it did before the cosmetic damage occurred.

In this case, it is agreed that hail damage is covered but is subject to the policy limits to coverage as stated above.

There were several issues in this case related to improper joinder and diversity and insurance code violations.  The short focus is on the covered and non-covered causes of loss issue.

2223 had hired an expert, Dr. Hall, whose testimony indicates that 2223’s roof was damaged by both covered and non-covered causes of loss.  He testified that some of the degranulation of the roof was caused by ordinary wear and tear rather than by a hail storm.  Thus, this testimony triggered 2223’s burden to provide evidence by which a jury could reasonably apportion the resulting harm.

The Court ruled that 2223 met this burden and pointed out that 2223 was not obligated to present overwhelming evidence that would allow a trier of fact to flawlessly segregate covered from non-covered damages or to provide precise percentages.  Even though Hall did not attempt to segregate wear and tear damage from hail damage, he did provide a reasonable basis on which a trier of fact may do so.  He testified that a covered hail storm was the predominant cause of damage to the 2223 roof and that could be understood to mean that a majority, or more than 50% of the cost of the roof replacement was attributable to the hail storm.  A trier of fact could start with the fact that Hall provided photographs of the damaged areas of the roof that were clearly caused by wear and tear and subtract the approximate percentage of the roof clearly damaged by wear and tear from the remainder of the roof that was damaged by hail.

Thus, the Court ruled that Hall’s testimony was sufficient to provide a reasonable basis on which a jury could segregate damages and as a result Mount Vernon’s summary judgment motion on this issue was denied.