INSURANCE-HOMEOWNERS-EXCLUSION-SEWAGE BACKUP

May 31st, 2017 by Rieders Travis in Insurance

Windows v. Erie Ins. Exch., 2017 Pa. Super. LEXIS 309 (May 1, 2017) Moulton, J.  Erie Insurance Exchange (“Erie”) appeals from the February 24, 2016 judgment entered in the Allegheny County Court of Common Pleas in favor of Howard Windows, Jr. and Eleanor Windows (“Homeowners”). We reverse and remand for further proceedings.

This matter arises from Erie’s denial of an insurance claim made by the Homeowners following the infiltration of raw sewage into their home in May 2012. Erie denied the claim, and on May 2, 2013, the Homeowners filed a complaint, alleging that Erie breached its policy. On March 9, 2015, Erie filed a motion for summary judgment, arguing that the policy’s “general exclusion for water damage unambiguously excludes coverage for the Homeowners’ losses because the back up of raw sewage and water through the Warner Alley sewer system and the drain in the Homeowners’ basement contributed to their losses.”

On summary judgment, Erie argued that the water damage exclusion unambiguously precluded coverage for the Homeowners’ losses.  We disagree.

Here, the water-damage exclusion in the Homeowners’ insurance policy provides that losses caused by “water or sewage which backs up through sewers and drains” are excluded from coverage. The policy does not define the term “backs up.”

Based on the language of the Erie policy, and on the limited case law interpreting similar language, we conclude that the water-damage exclusion is subject to more than one reasonable interpretation. Because the provision is ambiguous, Erie failed to meet its burden at summary judgment of proving that the Homeowners’ loss was necessarily excluded.

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