Segregation Of Damages – Property Damage Claims

Lawyers who handle property damage claims learn real fast that the damages that exist on the property have to be properly segregated when making an insurance claim.  What does this mean?  The most common situation that arises is after a hail and wind storm.  An insured discovers damage to his home and makes a claim.  Nest, the insurance company says that all the damage is not covered.  A law suit results.

The law is clear that an insured has the burden of proving what damages occurred, when they occurred, and how they occurred.  Often times there is damage from a hail storm but some of the damage may have occurred in at a different time and in a different storm.  When this happens, it it he responsibility of the insured, not the insurance company to explain and prove when and how the damage occurred.

This is discussed in a 2006, Northern District of Texas case, styled, Atwill v. State Farm Lloyds.

The insured purchased a standard Texas homeowner’s policy from the insurer, State Farm.  The insured eventually filed three separate claims for mold damage to the insured’s home.  State Farm paid out over $345,000 in claims to the insured.  The insured then sued claiming that the policy required State Farm to pay up to the policy limit three times because three individual claims had been filed.  State Farm then moved for summary judgment on the ground that the insured had failed to present any evidence that the insured suffered damages by a covered peril that had not already been paid.  Furthermore, State Farm claimed that the insured had not established any evidence which would allow a jury to segregate covered from non-covered losses.

The Court granted State Farm’s motion for summary judgement, holding that the insured had failed to establish the mold claim had been caused by a covered loss; moreover, even if there was damage caused by a covered loss, the insured failed to present any evidence which would allow a jury to segregate the covered and non-covered causes of loss.  The court found that the insured’s witness never testified regarding the actual source of the cause of loss, only that it was caused by water.  Furthermore, the court determined that State Farm had produced competent evidence that the damages could have been caused by a non-covered peril.  Therefore, the burden of proof shifted to the insured to prove whether an exception applied to the exclusion.  The court held that the insured’s evidence failed to show that an exception applied to State Farm’s exclusion.