Disagreement Does Not Mean Ambiguity

By: Michelle E. Gaston

Published: November 16, 2020

West Virginia Supreme Court Upholds Water Backup Exclusion

The Supreme Court of Appeals of West Virginia recently found an exclusion for loss or damage caused by “water that backs up or overflows from a sewer, drain, or sump” pump clear and unambiguous. The Court overturned the policyholder’s award of summary judgment and found there was no coverage under the commercial property insurance policy.

In Motorists Mut. Ins. Co. v. Zukoff , the building where the Zukoffs’ business, Accessories Ltd., was located in Moundsville, West Virginia was flooded by sewage. An employee of the Moundsville Sanitary Board was advised that a resident heard a “gurgling” in the basement, indicative of a clogged line. The employee injected water into the line to clean it out, and the level returned to normal. A few minutes later, the employee was advised that sewage was coming out of the clean outs in front of Accessories Ltd.  When inserting a hose to clean out the line did not work, the employee and his supervisor located the blockage and the employee used his hands to remove it. By the time the line was unclogged,  however, Accessories Ltd. had suffered damage for which it sought coverage under its commercial property policy issued by Motorists Mutual Insurance Company. The insurer denied coverage pursuant to the water backup exclusion. The policyholder filed a declaratory judgment action and the circuit court awarded it summary judgment finding that because the phrase “backs up” was not defined, the policy was ambiguous and the doctrine of “reasonable expectations” was to be applied. Although the circuit court held that it was not reasonable to expect coverage if the source of the water and sewage backup was on the premises, the court found that it was reasonable to expect coverage if the source was off of the insured premises. Because the source of the subject back up was external, the court found the water backup exclusion inapplicable.

The West Virginia Court reversed. The Court stated that simply because the insurance policy did not define the phrase “backs up,” the policy was not ambiguous. The Court cited a 2006 decision from the Kanawha County Circuit Court, Sylvania Props., LLC v. S. Putnam Pub. Serv. Dist. where the trial court held that a similar insurance policy exclusion was clear and unambiguous.

Additionally, the Court noted that the Motorists Mutual exclusion applied to water that “overflows,” which was also an unambiguous term. The Court stated “no matter how the entry of water into the premises from the sewer was described, a plain reading of the policy language clearly shows that a person would understand that coverage for this loss would be excluded where water “back[ed] up” and “over flow[ed]” into the Accessories Ltd. premises.”

Click here to read the full Motorists Mut. Ins. Co. v. Zukoff decision.

No. 19-0711 (W.Va. Nov. 12, 2020).

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