The case of Divine Motel Group, LLC v. Rockhill Ins. Co., 2016 WL 3902041 (11th Cir. 2016) illustrates the importance of presenting and supporting your theme for insurance coverage. This theme needs to be well thought out and considered in the context of maximizing insurance coverage. Otherwise, you are navigating in the world of insurance exclusions without a strategic agenda as to why an exclusion does not apply, such as there is an exception to the exclusion that your theme fits under.
In Divine Motel Group, an insured pursued its property insurer for rainwater damage stemming from a tropical storm. The property insurance policy contained the following exclusion for rain damage in addition to an exception to the exclusion:
[Rockhill] will not pay for loss of or damage to … [t]he interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain, … whether driven by wind or not.” The policy contained an exception to this exclusion, providing that Rockhill would pay for damage to the interiors caused by rain if “[t]he building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain … enters.” The policy listed “windstorm” as a covered cause of loss.
Divine Motel Group, supra, at *1.
Huh?!? An exclusion and an exception to an exclusion?!? That’s right. In a nutshell, the rainwater exclusion says that the policy does cover damage caused by rain. But, as an exception, the policy will cover rainwater damage if the property FIRST sustained damage to its roof or walls by a loss covered under the policy through which the rainwater enters.
The insured argued that the exception to the exclusion applied because the rainwater entered through roofs and walls damaged by the tropical storm (e.g., a covered cause of loss to the roof or walls through which the rain entered).
The problem for the insured was that it was unable to point to any competent evidence, including opinions from its expert, that there was damage to the roof and walls through which the rainwater entered. There the problem lies, as you can imagine, since there was no competent evidence to support the insured’s theme which was that the exception to the rainwater damage exclusion applied.
The morale is that if relying on an exception to an exclusion, the theme of the case, including expert opinions, needs to be specifically centered around the exception. There needs to be competent evidence in the record to prove that an exception to an exclusion applied. For instance, in this case, there was nothing in the record to prove that the tropical storm damaged the roofs and walls through which rainwater entered triggering the exception to the exclusion.
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