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Massachusetts Court: Loss of Drink Product Caused By Faulty Workmanship And Design of Bottle Caps Not a Covered Ensuing Loss

Monday saw a unanimous panel of Massachusetts’ intermediate level appellate court reject a policyholder’s ensuing loss arguments.  In H.P. Hood LLC v. Allianz Global Risks U.S. Ins. Co., 2015 Mass. App. LEXIS 175, 2015 WL 6629484 (Mass., Nov. 2, 2015), the justices held that the loss of over two million bottles of an energy drink was not separate or different in kind but rather “directly caused by, and completely bound up in” the excluded peril — faulty workmanship and design of the bottle caps. The insured produced a high-performance protein supplement known as Myoplex for Abbott Laboratories, and it had contracted to manufacture some forty million bottles in 2009.  The drink was a “shelf stable” beverage that did not require

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Posted in Direct Physical Loss or Damage, Ensuing Loss, Faulty Workmanship or Design

Missouri Court Clarifies What Constitutes An Ensuing Loss

Last week in Performance Arts Cmty. Improvement Dist. v. ACE Amer. Ins. Co., 2015 WL 3491292, 2015 U.S. Dist. LEXIS 71592 (W.D. Mo., June 3, 2015), a federal court in Missouri shot down an insured’s arguments that a wall collapse caused by the excluded peril of defective design was a covered ensuing loss under a builder’s risk policy.  The developer admittedly erred in calling an for excess amount of concrete slurry to be pumped behind the structure, but the policyholder contended that the collapse that that mistake caused was a separate loss by “excessive lateral pressure.”  The court analogized to that to arguing that the collapse of a defectively-designed building was a separate loss caused by the covered peril of

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Posted in Builders' Risk, Collapse, Ensuing Loss, Faulty Workmanship or Design

New Jersey Trial Court Holds Storm Surge Not Subject to Flood Sublimit Where Policy Expressly Includes “Ensuing Storm Surge” in Named Windstorm Coverage

In recent years, many courts have held that storm surge is a species of excluded flood loss; we reported on a New York example in July.  This week, in Public Serv. Enter. Group, v. ACE Amer. Ins. Co., 2015 WL 1428370, Unpub. LEXIS 620 (N.J.Super., Mar. 23, 2015), a New Jersey trial court granted summary judgment to Public Service Electric & Gas (PSEG) and held that the flood sublimit did not apply to a claim for Superstorm Sandy loss from storm surge where the contracts of insurance specifically recited that coverage for a “named windstorm” – which was not subject to any sublimit  –  included “ensuing storm surge.” Eight large PSEG generating stations and a number of smaller distribution facilities

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Posted in Causation, Efficient Proximate Cause, Ensuing Loss, Flood, Superstorm Sandy, Windstorm

Iowa’s Highest Court: Damage by Rainwater is Damage by Rain

Last July, we posted that an intermediate level appellate court in Iowa had held that a policy excluding loss “caused by rain” did not bar coverage for loss occasioned by the non-excluded peril of “rainwater.”  On Friday, the state’s highest court threw cold water on such nonsense, holding that there was no distinction between rain and rainwater for coverage purposes.  No justice disagreed, though the court split 4-3 on another issue.  The decision can be found at Amish Connection, Inc. v. State Farm Fire & Cas. Co., 2015 WL 1260085, 2015 Iowa Sup. LEXIS 32 (Iowa, Mar. 20, 2015). The insured operated the Amish Connection Store in Crossroads Shopping Mall in Waterloo, Iowa.  Rooftop drains discharged into a 4” cast-iron

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Posted in Anti-Concurrent Causation, Corrosion, Ensuing Loss, Flood, Water

New York’s Highest Court Enforces a Water Damage Exclusion Despite an Ensuing Loss Exception

In Platek v. Town of Hamberg, et al., 2015 WL 685726, 2015 N.Y. LEXIS 252 (N.Y., Feb. 19, 2015), the New York Court of Appeals held that an exclusion for water below the surface of the ground was unambiguous and operated to bar coverage when a subsurface water main burst and flooded the insureds’ basement.  The policyholders’ attempt to invoke an ensuing loss exception to the exclusion was also rejected in an opinion that surveys the historical genesis of ensuing loss provisions and explains the limited circumstances under which they operate to restore coverage. The insureds, Frederick and Mary Platek, owned a home in Hamberg, New York.  On September 7, 2010, a subsurface water main abutting their property ruptured, flooding

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Posted in Ambiguity, Burden of Proof, Ensuing Loss, Explosion, Flood, Water
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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