No Cover for a 5000 gallon, 25 Day Water Seepage

Water Damage Specifically and Clearly Excluded

After five thousand gallons of water running continuously at a rate of nine to ten gallons per hour for a 25-day period seriously caused damage to a residence including mold growth and infestation. The insured sought reversal of Allstate’s denial of coverage based on a clear exclusion as continuous or repeated seepage or leakage over a period of weeks, months, or years, of water.

In Kimberly Landrum f/k/a Kimberly Shepard v. Allstate Insurance Company, Civil Action No. 5:18-cv-00458-TES, United States District Court for the Middle District of Georgia Macon Division (October 9, 2019) Kimberly Landrum sued to recover indemnity for damage to her vacation home in Milledgeville, Georgia that was damaged by water.

FACTUAL BACKGROUND

Landrum purchased a homeowners insurance policy from Allstate in 2017 that covers “sudden and accidental direct physical loss” to her Milledgeville, Georgia property.
The Policy explicitly excludes coverage for “[s]eepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years, … or b) from within or around any plumbing fixtures … or other fixtures designed for the use of water or steam.”

On April 4, Landrum received a call from a neighbor informing her that the Milledgeville Water Department had left a note on her door. Landrum arrived at the property later that day and discovered water “spewing out from under the sink in the kitchen.” There was approximately a half inch of water covering the main floor of the house, and some had seeped into the basement. Landrum turned off the water supply to the house and later determined that the water came from a supply line running from the kitchen sink to the refrigerator ice maker.

Allstate adjuster Thomas Specht inspected the property on April 16, 2018 and determined from examining mold growth that water had been coming out of the supply line for enough time to deny Landrum’s claim. Allstate sent Landrum a formal denial letter the following day.

In her complaint, Landrum claims that the water damage to her property is covered under the Policy and that Allstate’s denial of coverage constituted a bad-faith breach of the Policy.

DISCUSSION

Policy Language

The parties primarily dispute whether the Policy’s exclusion of “seepage, meaning continuous or repeated seepage or leakage,” is ambiguous. Landrum argues that this circular definition renders “seepage” per se ambiguous.  An ambiguity only exists where the words used in the contract leave the intent of the parties in question — i.e., that intent is uncertain, unclear, or is open to various interpretations. Conversely, no ambiguity exists where, examining the contract as a whole and affording the words used therein their plain and ordinary meaning, the contract is capable of only one reasonable interpretation.

The definition of seepage in this case is not open to various interpretations, as the Policy clearly limits it to its plain meaning and the plain meaning of “leakage.”

Although Landrum seeks to limit the ordinary meanings to water that is “moving slowly” through an opening the Policy’s exclusion of both seepage, which in some definitions includes a speed component, and leakage, which does not include a speed component, clearly indicates the intention to exclude any escape of water, including that which is slow-moving and that which is not. Thus, it cannot reasonably be disputed that the loss to Landrum’s property arose from seepage as it is defined in the Policy and as that definition is informed through ordinary meaning.

Bifurcation of Damages

Landrum next argues that Allstate is liable for the damages that occurred during the first 13 days of the leak, despite the application of the Policy seepage exclusion. The Court, in other cases, has already determined that at least 14 days of seepage or leakage is required to trigger an exclusion, like the one here, for seepage or leakage “over a period of weeks, months, or years.”

Landrum claims that Allstate is required to bifurcate the damages to the property and provide coverage for the portion of the damages that arose from the first 13 days of the 25-day period of seepage, since a 13-day leak would, as a matter of law, occur over a period of days and not weeks. None of the evidence in this record establishes that the damages were caused by less than 25 days of leakage.

In the absence of evidence to create a genuine issue of fact as to whether the damages occurred from the first 13 days of the 25-day leak, Landrum cannot meet her burden on summary judgment as to this issue, and there is no dispute that the Policy excludes coverage.

Coverage for Mold Damage

Finally, Landrum argues that Allstate is liable for mold remediation arising from the water damage. However, the Policy clearly states that Allstate is only required to pay for mold remediation arising from a covered water loss. Because the Court has already determined that the water loss Landrum suffered is not covered by the Policy, mold resulting from that loss is also not covered.

The Policy unambiguously excluded coverage for the damages arising from the 25-day leak on Landrum’s property and she recovered nothing.

ZALMA OPINION

Sometimes interpreting an insurance policy is easy. A 25-day leak that destroyed much of the property and resulted in obvious mold growth was clearly and unambiguously excluded by the Allstate policy. The USDC read the policy, checked the dictionary, and ruled in favor of the insurer.


© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Excellence in Claims Handling Courses From Experfy.com

The Excellence In Claims Handling program provides everything a person or entity presenting a claim needs to effectively present the claim and provides the insurance claims person with everything he or she needs to properly represent the insurer.

The insured, risk manager, or corporate counsel will be able to present a first party property claim – whether a fire, theft, or windstorm or some other insured against cause – with little difficulty and professionalism and present a sworn proof of loss acceptable to an insurer.

The insurance claims person completing the course will be able conduct a thorough investigation of the policy and claim. The insurance claims person will also be able to assist an insured to fulfill all of the promises made by the insured to the insurer and the insurer to provide the indemnity promised by the insurance policy.

The series of courses was designed so that the student can obtain the needed information easily while he or she sits down in the morning for a first cup of coffee or any other time in the day in short, easy to consume lessons. For instance “Insurance and Claims” is made up of three modules and 27 lectures while “Investigating the Property Claim” is made up of four modules and 65 lectures. You can review each course, each module and each lecture at the links below.

Each person completing the course will be able to claim that he or she is a professional first party property claims person ready to provide excellence in claims handling and be ready to resolve any claims problem that arises for the benefit of the insurer and the policy holder.

Insurance and Claims: https://www.experfy.com/training/courses/insurance-and-claims

Investigating the Property Claims: https://www.experfy.com/training/courses/investigating-the-property-claim

Insurance Law: https://www.experfy.com/training/courses/insurance-law

Solving Claims Problems: https://www.experfy.com/training/courses/solving-claims-problems

 

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.