Interpreting Policy Language In Texas

Commercial insurance policies are commonly issued to business people in the Dallas, Fort Worth area, and through out the state. Even business owners in Grand Praire, Arlington, or out in Weatherford, will have one of these policies. When a claim is made, there is often times a dispute as to the coverage provided in the policy.
The Court of Appeals of Texas, Houston (14th Dist.), decided a case on May 20, 2010, that does a pretty thorough job going thru an analysis of how these cases are looked at by the courts. The decision was handed down by Chief Justice, Adele Hedges. The style of the case is Essex Insurance Company v. Eldridge Land, L.L.C.
Some of the facts are that Eldridge Land L.L.C. (Eldridge) owned a vacant building. They had purchased a commercial property insurance policy from Essex Insurance Company (Essex). The policy contained a clause providing for damage “caused by or resulting from theft,” and an exception to the theft damage exclusion for “damage caused by the breaking in or exiting of burglars.” The relevant language was:
A. COVERED CAUSES OF LOSS When Basic is shown in the Declarations, Covered Causes of Loss means the following:
….
8. Vandalism, meaning willful and malicious damage to, or destruction of the described property.
We will not pay for loss or damage:
a…..
b. Caused by or resulting from theft, except for building damage caused by the breaking in or exiting of burglars.
On March, 28,2006, Eldridge’s property sustained considerable damage. Some intruders apparently forced their way into the building and damaged sheetrock, ceiling tiles, electrical conduit boxes, and wall coverings. They also removed copper wiring and copper pipe from the building. Eldridge thereafter filed a claim with Essex seeking coverage. Essex denied the claim based primarily on the policy exclusion for loss or damage caused by or resulting from theft. Essex admitted some of the claim was covered but that the amount did not exceed the $5,000 deductible.
The issue in this case was one of policy interpretation. The court stated, “Whether policy language is ambiguous is a question of law. Ambiguity does not arise simply because the parties offer conflicting interpretations; rather, ambiguity exists only when the contract is susceptible of two or more reasonble interpretations. Usually, if language in an insurance policy is deemed susceptible to more than one reasonable interpretation, the reasonable construction most favorable to the insured will be imposed. Consequently, we construe an ambiguous insurance policy strictly against the insurer and liberally in favor of the insured.”
The court next went into more than a three page analysis of the facts in this case and the policy and the law. The reading is interesting, but ultimately illustrates why an experienced Insurance Law Attorney is needed in these cases.
In this case, the court concluded that the evidence established that all damage above the policy deductible were caused by or resulting from theft. As a result, there was no coverage above the deductible.