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A loss caused by wear and tear is not unfortunate



This insurance protection dispute concerns damage to a building that was due to the rainwater dusting on the roof and eventually finding its way inside. The question of appeal is whether the damage is covered by the relevant policy or excluded by one or more of its many "exceptions" or "limitations." O.L. MatthewS, M.D., P.C. v. Harleysville Insurance Co. No. 19-1994, United States Court of Appeals for the Sixth Circuit (September 9, 2020), The Sixth Circuit was asked to reverse a request for a summary judgment granted because the loss was due to wear and tear on an old roof and was not random. .

FACTS

Plaintiff OL Matthews, M.D., P.C. ("OLM") owned a building in Inkster, Michigan and used it as a medical office. OLM bought the building in the early 1

980s and for many years neither OLM nor its owner, Dr. O.L. Matthews, paid close attention to the condition of the roof. That changed in January 2017, when the roof began to leak. OLM filed a "Businessowners policy" claim with defendant Harleysville Insurance Company, but Harleysville denied coverage and its agent told OLM that the roof needed maintenance.

After the roof continued to leak, OLM immediately filed a claim with Harleysville, which hired David Walenga, a civil engineer, to investigate and determine the "cause of the loss". Walenga examined the roof and reached three important conclusions:

First, moisture penetrated into the billet building due to the exploitation of fractures in the roof from latent defects and lack of proper and prompt maintenance or repair. The roof lacks sufficient pitch or drainage to prevent dusting. Dusted moisture can penetrate the building via defects such as failed or weak membrane seams and failed penetration flashes.

Secondly, based on corrosion of metal in the roof and damage to the roof tiles, "[m] oisture ha [d] has penetrated the subject building to some extent for a time exceeding the time frame between the alleged loss period and [the]

Third, Walenga "found no indication that the roof had [d] been moved or damaged by a single weather-related event, such as wind."

Relying on Walenga's report, Harleysville concluded that "loss was caused by exploitation of roof defects from latent defects and lack of proper and prompt maintenance or repair ”and that the policy“ does not cover this loss. ”Harleysville denied OLM's second claim in December 2017.

OLM hired its own expert who characterized the precipitation that led to damage to the building in August 2017 as "the straw that broke the camels [sic] back", as "several areas. . . failed and could no longer support the weight of the roof and the dusty water.

OLM sued Harleysville and Harleysville eventually moved for a summary assessment, arguing that several "exceptions" or "restrictions" in the policy preclude coverage for damage to the building. The district court agreed, upheld the proposal and ruled in favor of Harleysville. O . L . Matthews M . D ., P . C . v . Harleysville Ins . Co ., 412 F. Supp. 3d 717 (E.D. Mich. 2019).

ANALYSIS

Here the parties agree on relevant facts, and this appeal addresses a legal issue: the interpretation of an insurance policy. Interpretation of an insurance ultimately requires a two-step investigation:

First, a coverage determination under the general insurance contract; and

Second, a decision on whether an exemption applies to comprehensive coverage. can not be held responsible for a risk that it did not assume.

OLM repeatedly emphasizes that the insurance is an "all-risk" insurance. An "all-risk" policy creates coverage of a type not normally found under other types of insurance, and recovery is permitted for unintentional losses unless the loss is excluded by a specific insurance policy. But an "all-risk" policy does not cover all risks.

Policy excludes from coverage "loss or damage caused by or due to": Incorrect, insufficient or defective: (1) Planning, zoning, development, mapping, location (2) Design, specifications, execution, repair, construction, renovation, remodeling, classification, compaction; (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance; of or parts of any property on or outside the described premises.

According to Harleysville, the location of the drain caused the water to drain on the roof, leading to the membrane being torn down and the damage to the inside of the building. Expert testimony supports this claim. Even OLM's expert testified that "the drain is set too high" and explained that between the location of the roof tile and the drain, "the roof deck must carry the weight of almost five inches of water before it can be discharged into the roof drain." He also stated that the weight of the water on the roof was caused by "the poor design of the roof", which included "the poor design of where the drain was." Harleysville's expert stated in his report that "

The policy also excludes "wear and tear" defined as "[d] eterioration caused by ordinary use; depreciation of property arising from its reasonable use." Wear and Tear Black & # 39; s Law Dictionary 1827 (10th edition 2014) Damages caused by normal wear and tear are often excluded from coverage because it is a type of improper loss. Unlike negligent exclusion of work, this "wear separation" does not have a subsequent clause. , and if wear contributed to the loss, the policy does not cover it.

The document shows that wear was a cause of the loss. OLM's expert testified that "the wear [the roof] has suffered is from the weight of the water that pulls the membrane apart. To be sure, a broad interpretation of "wear and tear" combined with the application of the rule against causation can cause coverage to be denied in almost all situations, even with a risk risk policy. In this case, where the roof had survived its intended service life twice and had been poorly maintained and monitored during that time, wear and tear is not the only provision of the policy that prevents coverage in this case.

Under Michigan law, an insured person loses coverage under an insurance policy if one of the insurance exceptions applies to the insured's specific claims. Exclusion of wear and tear and the limitation of leakage both apply here, and as a result the damage to the building is not due to a "covered cause of loss" according to the policy.

An "All Risk" policy only covers the risks of physical loss that are not excluded. It is not a policy for all claims. No "All Risk" policy insures against all possible causes of loss. Insurance by definition requires fortuity – an accident – and that's why Harleysville was right. A roof that was leaking because it was old and not maintained did not lead to an unfortunate loss and OLM had no right to regain the benefits of the policy.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE now limits his practice to acting as an insurance consultant specializing in insurance coverage, insurance management, insurance claims and insurance fraud almost equally for insurance companies. He also acts 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 lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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