A federal judge in Pennsylvania denied an insurer’s motion for summary judgment on the issue of coverage finding that issues of fact existed whether or not the insureds’ flood policy exclusively covered personal property.1
Plaintiffs Krupa and Patel owned a Subway franchise damaged by flooding on September 8, 2011. The plaintiffs’ submitted a claim for flood damages to Allstate which was acting as a “Write Your Own” carrier and administered the Standard Flood Insurance Policy covering the plaintiffs’ property. Allstate denied the claim contending that the policy only covered personal property and therefore did not cover the loss in question. In addition Allstate claimed that the policy had been transferred from a previous insured and was therefore not valid.
I will address the first issue of whether the policy covered personal property, and not the issue of assignment.
While the policy indicated that coverage was to be applied to contents the court found that the meaning of the term contents was ambiguous given the fact scenario presented. Specifically, the court noted three ambiguities:
- that the meaning of the term ‘contents’ in the context of this case was not clear;
- the particular contents covered were not listed; and
- the court found it was not clear whether the term contents should be construed as synonymous with personal property under the policy.
The court noted that the SFIP does not define the term contents.
The plaintiffs’ deposition testimony described the purchase of ‘equipment’ and ‘contents’ as well as the purchase of the Subway business franchise, but it was not clear from the testimony whether the definitions of ‘equipment’ and ‘contents’ as described was synonymous with the term ‘personal property’ as written in the policy. For this reason the judge concluded that an issue of fact existed and therefore summary judgment was precluded.
This case illustrates how a contractual ambiguity can work in favor of an insured. Just because a carrier denies a claim does not mean the claim is not valid. As this case illustrates terms like ‘contents’ and ‘personal property’ may well require clarification and a factual determination.
If your claim has been denied by your insurance carrier you should contact a professional to review your claim.