The Insurance Policy Has To Be Read Carefully

Most people who buy a homeowners insurance policy think that if anything happens to cause damage to their home, that they are covered.  Well, that is simply not case way to often.  All those pages of the policy are pages explaining what is not covered or placing limitations on what is covered.

Here is a 2023 opinion from the Northern District of Texas, Amarillo Division that deals with a homeowners claim.  The opinion is styled, Laur v. Safeco Insurance Company of Indiana.

This opinion is the result of a motion for summary judgment being filed by Safeco.

The basement of the Laurs’ residence filled with water.  The cause of the flooding was a rupture in the PVC piping of the irrigation system in the backyard of the residence.  An inspector retained by Safeco, Chris Royce (“Royce”), opined that the rupture was the result of sustained freezing temperatures in the area associated with a passing winter storm.  Upon discovery of the flooding damage, the Laurs filed a claim with Safeco, which denied the claim, citing Exclusions 2 and 8 of the policy.  In relevant part, Exclusion 2 states that Safeco will not pay for damage resulting from “freezing, thawing, pressure or weight of water, ice or snow whether driven by wind or not, to a…landscape sprinkler system…”  Exclusion 8, meanwhile, states that water damage is not covered under the policy, meaning “release of water held by…a water or flood control device.”

The motion revolves around a question of contract interpretation.  The Laurs contend the policy does cover the damage at issue and are thus entitled to summary judgment, at least as to the breach of contract claim, while Safeco argues the opposite.  Thus, this case turns on the relatively straightforward interpretation of the policy language.

Under Texas law, the essential elements of breach of contract are (1) the existence of a valid contract, (2) performance or tendered performance by a plaintiff, (3) breach of the contract by the defendant, and (4) damages sustained as a result of the breach.  Safeco contends that the Laurs cannot sustain the third element because the loss at issue here is not covered.

The plain language of the policy demonstrates, in fairly broad terms, that losses resulting from freezing to, inter alia, a landscape sprinkler system are not covered.  The policy also states that, at bottom, if the loss involves an exclusion in any way, there is no coverage.  The analysis by Royce, who was retained by Safeco and quoted extensively by the Laurs, conclusively shows the loss was caused by freezing to the landscape sprinkler system.

Exclusion 8 concerns damage caused by surface and subsurface water.  Subsection A(2) of the exclusion prohibits recovery under the policy for “release of water held…by a water or flood control device.”  Subsection B excludes all water below the surface of the ground and is applicable regardless of the cause.  Much like Exclusion 2, the language here is conclusively applicable.  A landscape sprinkler system can perhaps best be thought of as a water control device, making Exclusion 8 applicable.  The water at issue here was also below the surface of the ground, further demonstrating the applicability of the exclusion.

The policy states that Exclusion 2 does “not apply to ensuing loss resulting from a peril described under Perils Insured Against.”  The relevant part of Exclusion 2, the freezing of a landscape sprinkler system, is the instigating act in this case, not an ensuing one.  In other words, when the sprinkler system froze, it begat the flooding of the basement.  For the exception to Exclusion 2 to be applicable, the opposite would have to be the case; the freezing would have to be the ensuing, rather than the instigating, cause.

Therefore, the Laurs have met their burden to show coverage, but Safeco has also met its burden to show Exclusions 2 and 8 are applicable.  In response, the Laurs have not met their burden to show an exception to the exclusions applies.  Thus, the Laurs’ breach of contract claim fails.

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