Whether residential or commercial, most property coverage policies exclude loss caused by freezing, unless the insured either:

  1. Uses reasonable or best efforts to maintain heat in the building; or
  2. drains the plumbing lines. Application of this freezing exclusion, however, often turns on interpreting or defining what the terms “reasonable,” “best efforts,” and “building” mean.

Many multi-unit residential or mixed use commercial buildings do not define the phrase “building” to include each individual unit or commercial space. So, what happens if heat is maintained in the first-floor commercial area, but not in the second or third-floor residential area and a pipe freezes in the third-floor causing water damage? Is the loss covered? I had this exact situation arise several years ago and presented the issue to a jury. It was undisputed that the loss had been caused by the freezing of a plumbing line and the water had not been drained from the lines. However, the insured had maintained heat in the first-floor commercial area of the building. I argued to the jury that the insured had complied with the policy and maintained heat in the building, alternatively arguing that the policy was ambiguous on whether the policy required heat be maintained in each floor of the building. The insurer argued that the insured failed to comply with the policy and that he did not use reasonable efforts where heat was not maintained in each floor of the building. Ultimately, the jury returned a verdict in favor of the insured.

While most policies continue to use similar language in the freezing exclusion, some policies now are including Protective Safeguard Endorsements related to the maintenance of heat. One such example is found in the case of 455 Companies, LLC v. Landmark American Insurance Company.1 There, the policy contained a Protective Safeguard Endorsement which provided that as a condition of insurance, the insured was required to maintain heat at 55 degrees. The insured moved for summary judgment, asserting that the policy excluded coverage for water damage only if the defendant could show the insured failed to use “best efforts” to maintain heat above 55 degrees. The trial court disagreed with the insured’s interpretation finding that coverage did not turn on whether the plaintiff used “best efforts” to maintain the building’s temperature. Rather, the court found that the protective safeguard endorsement was not ambiguous and any conflict between the terms of the endorsement and the form provisions would be resolved in favor of the endorsement. The policy’s requirements of “best efforts” was trumped by the Protective Safeguard Endorsement which required that heat be maintained at or above 55 degrees.

The Protective Safeguard Endorsement is a good example of how an insurer can draft a policy to include specific requirements for the maintenance of heat, or define “reasonable efforts.”
1 455 Companies, LLC v. Landmark American Ins. Co., 2017 WL 3215197 (E.D. Mich. July 28, 2017).