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Policy exemption bars sewage damage coverage: court



A policy exclusion that prevents coverage for water backing or flowing from a sewer includes damage caused by sewage entering an insured property, Ohio Supreme Court said Wednesday when it overturned a subpoena.

In 2014, drains from the local sewer system were backed up at Bank Nightclub in Akron, Ohio, which was insured by Bedford, Texas-based United Specialty Insurance Co., according to the judgment in AKC Inc., dba Cleantech v. United Specialty Insurance Co.

The bar hired the North Canton, Ohio-based AKC, which operates as Cleantech, to clean up the place. After United Specialty refused to provide coverage, citing the exclusion, AKC awarded all claims it could have against the insurer and AKC sued the insurer for breach of contract.

A district court ruled in favor of the insurer but was overturned by an appellate court.

Water that backs up or flows from a sewer will obviously contain wastewater, the Supreme Court said in its 4-1

decision. "In fact, there is no doubt that the average person buying insurance would understand that this is the case," it said.

"Given the simple and unequivocal language of the policy we have before us and the decisions of many courts across the country, the exclusion of water backup clearly includes damage caused by wastewater and there is no coverage here, "The majority statement said, in reverse appeal court.

A dissenting opinion stated, "If the exclusion had included raw sewage backed up from sanitary sewers, it could have specifically stated so."

Lawyers in the case did not respond to requests for comment.

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