In Gillin v. Universal Underwriters Insurance Company, the insureds owned a property in Darby, Pennsylvania that suffered severe damage when a wall on the neighboring property collapsed. At the time of the incident, the insureds had a property insurance policy with the insurer, and they submitted a claim for coverage under the policy shortly after the damage occurred. An independent adjuster inspected the property, and the insurer rejected the insureds’ claim only days after they submitted it.
The insurer had determined that the losses sustained fell under a provision in the policy that excludes “losses caused directly or indirectly from settling, shrinkage, bulging or expansions of foundations, walls, floors, roofs, or ceilings.” The insureds were not satisfied with the insurer’s decision, and they hired their own investigator to inspect the property. He asserted that the collapse of the bearing wall was “the direct result of additional retained soil places behind the retaining wall,” which would not trigger the exclusion mentioned above.
The insureds eventually sued the owner of the neighboring property, and they ended up recovering $140,000 in damages. After later selling their property, the insureds filed the instant suit against the insurer based on the information their investigator gave them, alleging breach of contract and bad faith. The insurer filed a motion for summary judgment, after which the insureds voluntarily withdrew the bad faith count without prejudice.
Because the parties did not dispute any key facts, the court simply had to interpret the insurance policy to determine whether the insurer breached its contract. It noted that if a provision in a policy is ambiguous, then it should be construed in favor of the insured, but a mere disagreement about an interpretation of a provision does not mean that the provision is ambiguous. In fact, the court here felt that the language of the policy exclusion mentioned above was clear and unambiguous. It had no choice but to give effect to the language of the exclusion and hold that the exclusion applied. The court therefore granted the insurer’s motion for summary judgment on the breach of contract after acknowledging again that the bad faith count was voluntarily dismissed without prejudice.
Date of Decision: March 4, 2011