When I first came to the staff of The FC&S Bulletins, I was introduced to a number of insurance contract (policy) interpretative principles that underlie the basis of situational analysis for us here. Things such as, "Policy coverage agreements are broadly construed and policy exclusions are narrowly construed," and, "An ambiguity that can be read into the policy will be resolved in favor of the insured." And ejusdem generis — a favorite of former FC&S editor Eugene Wolters (my old boss) — that said (from the hoary and revered Black's Law Dictionary Special Deluxe Fifth Edition), "of the same kind, class, or nature."
What this means is that, in construction of "laws, wills, and other instruments" (such as insurance policies), the ejusdem generis rule dictates, "Where general words follow an enumeration of … things by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to … things of the same general kind of class as those specifically mentioned."
So what? Well, it means that bat guano (even called waste) damage in a homeowner's attic cannot be denied insurance recovery under the homeowner pollution exclusion, in which pollutants specifically are defined to include "any … chemicals and waste."
To wit:
Our homeowner insured is covered with a standard HO 00 03. Recently, the insureds discovered bats living in their attic. The bats were forced to move by the insured's blocking all means of entrance, and the insured has turned in a claim for the damage to the interior of the attic (insulation material) and for cleanup caused by the bats' excretions.
The homeowner carrier has denied coverage based on the pollution exclusion, citing the phrase, "pollutants means any … chemicals and waste." The adjuster has stated that he has worked for several large national carriers and that this type of damage always has been excluded using this pollution exclusion. He added that the removal of the bats is the only covered portion of this loss, as the company would pay to remove them based on protecting the property from further damage.
My experience has been exactly the opposite with this type of claim: the bat damage (dung removal and cleanup) has been paid, and the removal of the animals has not, as carriers have argued that it is the insureds' responsibility to protect the property.
Any thoughts?
Signed, A Transylvania Subscriber [Just kidding; actually, it was from Michigan.]
My first thought is that the adjuster who worked for several large national carriers has not been doing either insureds or his employers any favors by not thinking this through. Given the adjuster's approach, removal of the bats would not be covered, as the "reasonable repair" additional coverage only applies when the covered property is damaged by a peril insured against. If bat guano damage would not be covered, neither would be the cost of protecting against it.
We at The FC&S, however, think that both the cost to remove the bats and the damage done by them are covered. The homeowner policy's pollution exclusion refers to "any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned, or reclaimed."
We now have tied bat guano to the ejusdem generis rule (Gene would be so proud). Here, the principle of ejusdem generis indicates that the interpretation is that all the pollutants mentioned in the homeowner pollution exclusion are man-made. Although "waste" commonly may refer to animal waste, the fact that the policy states that it means materials to be "recycled, reconditioned, or reclaimed" takes it out of that context, the use of some animal waste for fertilizer notwithstanding. Had the policy used the language "including, but not limited to," and continued with examples, the adjuster would have had an argument.
In this case, however, the pollutants appear to be industrially-caused and, therefore, the removal of the bats and the restoration of the damaged property is rightfully covered.
Another letter we received recently questions whether a boat can be considered as a vehicle:
I have a Homeowners 3 Special Form claim in which an insured's boat hit an underground cable and flipped over. The insured is making claim for the personal property that either was lost in the water or damaged by it. The personal property was not damaged due to a named peril, so I do not see any coverage, but the claim adjuster for the boatowner policy has told the insured that these items would be covered under the insured's HO policy. Are they?
Don't you just love it when somebody else takes the initiative to be in your business? Don't you love it even more when they may be right?
You are correct that the insured's personal property would have to be damaged by a homeowner policy named peril, as personal property on or off premises is only covered for named peril protection.
Dependent upon the legal position in your state, however, the argument might be made that damage was by named peril: the vehicle peril. The common dictionary definition of vehicle includes "conveyance." A boat can be a conveyance. It is analogous to damage to personal property's being carried in an automobile and being damaged in a car accident. Damage to the personal property was by vehicle collision.
Can the same be held for damage by boat collision? Perhaps. It depends whether the state in question has commented on the issue legally. If so affirmatively, the vehicle peril applies. If the case law is silent on the issue, a case might also be made or, at least, argued.
Carpe diem, and ejusdem generis. And Merry Christmas and Happy New Year from all of us on the staff of The FC&S Bulletins. May the New Year be good to you all.
Bruce Hillman is editorial director, Professional Publishing Division, of the National Underwriter Co. The FC&S Claim Queue is prepared and written by the editorial staff of The Fire, Casualty and Surety (FC&S) Bulletins, the most widely used encyclopedic reference service devoted to insurance policy interpretation and coverage topics. FC&S is published by The National Underwriter Company. The editors welcome comment at fcs@nuco.com. For more on FC&S, visit www.fcsbulletins.com
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