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Sewage "Backup" Deemed Ambiguous, Prompting SJ Denial (PA)

May 3, 2017

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<p>On May 1, the Superior Court of Pennsylvania affirmed a lower court’s decision to deny Erie Insurance Exchange’s (“Erie”) motion for summary judgment in <em><a href="http://blog.wcmlaw.com/wp-content/uploads/2017/05/Windows-v.-Erie-Insurance.pdf">Windows v. Erie Insurance</a></em>.  The case arises out of raw sewage infiltration into the home of Howard and Eleanor Windows in May 2012.  On May 2, 2013, Erie denied the claim citing a water damage exclusion in the Windows’s homeowner’s policy.  The Windows’s then filed a complaint alleging Erie breached the policy. Erie filed a motion for summary judgment arguing that raw sewage damage was unambiguously excluded from coverage by the water damage exclusion language.  Erie’s motion was denied and it appealed the decision. The policy excluded water damage, which meant, “water or sewage which backs up through sewers or drains or water which enters into and overflows from within a sump pump, sump pump well or any other system designed to remove subsurface water which is drained from the foundation area”. In Pennsylvania, it is for the finder of fact to resolve any ambiguities in a contract, such as an insurance policy, and to determine the parties’ intent in entering into that contract.   When an ambiguity exists, outside evidence is admissible to clarify the ambiguity and the parties’ intent. The court determined that the policy did not define the term “backs up”.  Erie argued that “backs up” entails any water or sewage that enters a premises no matter where it originated.  The alternative definition is that water or sewage “backs up” only when it returns to the premises from which it originated. Because the court found there was no definition of “backs up” in the policy and that there were conflicting definitions of the term found in other case law, it found that Erie subsequently failed to meet is burden for its motion for summary judgment. This case illustrates the importance of clear and unambiguous language in insurance policies.  If an exclusion or other provision in a policy is clearly written with adequate definitions then it can greatly decrease the chance of a court later rewriting a policy or extending coverage to claims a carrier would wish to deny.  Thanks to Peter Cardwell for his contribution to this post.  Please email <a href="mailto:BGibbons@wcmlaw.com">Brian Gibbons</a> with any questions.</p>

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