If you live in the North East you are aware of the bizarre weather we’ve been having up here. One day it’s 60°, the next day is -1°, the following day it’s snowing and the next it’s a monsoon. The ups and downs in temperature along with substantial precipitation can lead to freezing, melting, and re-freezing, which can ultimately lead to ice damming. Unfortunately, in New Jersey, the coverage for damage resulting from the ice damming may be limited by mold endorsements.
In Chadwell v. New Jersey Manufacturers Insurance Company,1 the plaintiff, Chadwell was insured with New Jersey Manufacturers Insurance Company (“NJM”) and after removing aluminum siding on his home discovered “mold, mildew and water damage on the underlying wood siding of two exterior walls.” The damage was reportedly caused by ice damming:
[I]ce filled the gutter along those walls at some point and forced water to travel (1) out of the back of the gutter, (2) along the underside of the roof overhang toward the wall, and (3) down, with the aid of gravity, between the aluminum siding and the original cedar siding of those walls.2
In denying the claim, NJM relied upon the mold endorsement in the policy:
[T]he mold endorsement references sections and subsections of the broad form policy. The mold endorsement adds a twelfth “Additional Coverage” to the eleven included in the broad form policy, limits the additional coverage to the sixteen perils insured against in the broad form policy and modifies the twelfth peril insured against—“Accidental Discharge Or Overflow Of Water Or Steam.” In pertinent part it provides:
SECTION I—PROPERTY COVERAGES ADDITIONAL COVERAGES
The following Additional Coverage is added:
12. “Fungi”, Wet Or Dry Rot, Or Bacteria
a. The amount shown in the Schedule above is the most we will pay for:
(1) The total of all loss payable under Section I—Property Coverages caused by “fungi”, wet or dry rot, or bacteria;
(2) The cost to remove “fungi”, wet or dry rot, or bacteria from property covered under Section I;
(3) The cost to tear out and replace any part of the building or other covered property as needed to gain access to the “fungi”, wet or dry rot, or bacteria; and
(4) The cost of testing of air or property to confirm the absence, presence or level of “fungi”, wet or dry rot, or bacteria, whether performed prior to, during or after removal, repair, restoration or replacement. The cost of such testing will be provided only to the extent that there is a reason to believe that there is the presence of “fungi”, wet or dry rot, or bacteria.
b. The coverage described in 12.a. only applies when such loss or costs are a result of a Peril Insured Against that occurs during the policy period and only if all reasonable means were used to save and preserve the property from further damage at and after the time the Peril Insured Against occurred.
[The omitted paragraphs, c. and d., discuss the amount the insurer will pay and damage that is and is not caused, in whole or in part, by fungi, wet or dry rot or bacteria.]
SECTION I—PERILS INSURED AGAINST
12. Accidental Discharge Or Overflow Of Water Or Steam
Paragraph 12.e. is added:
e. Caused by constant or repeated seepage or leakage of water or the presence or condensation of humidity, moisture or vapor, over a period of weeks, months or years unless such seepage or leakage of water or the presence or condensation of humidity, moisture or vapor and the resulting damage is unknown to all “insureds” and is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure.
The mold endorsement also modifies SECTION I—Exclusions. The broad form policy has eight exclusions, and the mold endorsement adds a ninth. It provides:
Exclusion 9. is added.
9. “Fungi”, Wet Or Dry Rot, Or Bacteria “Fungi”, Wet Or Dry Rot, Or Bacteria meaning the presence, growth, proliferation, spread or any activity of “fungi”, wet or dry rot, or bacteria.
This exclusion does not apply:
a. When “fungi”, wet or dry rot, or bacteria results from fire or lightning; or
b. To the extent coverage is provided for in the “Fungi”, Wet Or Dry Rot, Or Bacteria Additional Coverage under Section I—Property Coverage with respect to loss caused by a Peril Insured Against other than fire or lightning.
Direct loss by a Peril Insured Against resulting from “fungi”, wet or dry rot, or bacteria is covered.
(Emphasis added by the court)
Chadwell argued that the, “mold endorsement misleads consumers by purporting to also amend the perils and exclusions sections of the broad form policy.” The court disagreed:
Given the clear interrelated structure of the broad form and the mold endorsement, the phrasing of the policy does not preclude the average policyholder from discerning the boundaries of coverage. Even if we were to accept the dubious proposition that we should consider confusion encountered by a consumer who elects to read the mold endorsement without reference to the broad form policy it modifies, (citation omitted) we could not conclude that this endorsement specifically modifying sections and paragraphs of the broad form policy is confusing. Because the mold endorsement cannot be understood without reading the specific provisions of the broad form policy it modifies, the average policyholder would not attempt to read it as a free-standing document.
Ultimately, the court states:
Chadwell presents no argument to bring his mold condition, attributable to ice-damming, within the basic terms of the policy covering a loss or cost for loss or costs that are “a result of a Peril Insured Against,” and we see none that applies. In the absence of a material dispute of fact that would bring the claim within the basic terms of the policy, NJM is entitled to summary judgment.
The take away here, as always is, read your policy. However, I agree with the plaintiff here, and think that the average policyholder would be confused by the back and forth nature of the language in the policy. From the facts in this case, it is unclear when the ice damming took place, it is only known when the damage was discovered. If you suspect that your home may suffer ice damming damage, be sure to document it and if necessary report it to your carrier immediately. For more information on the tell-tale signs of ice damming, check out Rob Trautmann’s blog post: Ice Damming and Winter Storm Jonas – Protecting Your Potential Claim.
As always, I’ll leave you with a (mildly) related tune, here’s the Boss and the E-Street Band with Tenth Avenue Freeze Out: