Opinion ID: 1936459
Heading Depth: 1
Heading Rank: 6

Heading: resulting loss

Text: Obviously, the focus of this appeal is the coverage provided under the Policy. Before examining the relevant provisions, however, a brief overview of the Policy will provide context for our subsequent analysis. The Policy's table of contents shows that the Policy is divided into five parts and a number of subparts. Here, the disputed provisions are found in Section I, which is entitled SECTION IYOUR PROPERTY. The table of contents, with respect to Section I, is as follows: SECTION IYOUR PROPERTY COVERAGES ......................... 3 Coverage A-Dwelling ............... 3 Coverage B-Personal Property ...... 3 Coverage C-Loss of Use ............ 4 Additional Coverages .............. 5 Inflation Coverage ................ 7 LOSSES INSURED ..................... 7 LOSSES NOT INSURED ................. 9 LOSS SETTLEMENT ................... 11 CONDITIONS ........................ 13 In the body of the Policy, under the provision entitled COVERAGES, the Policy states that under Coverage A, State Farm covers the dwelling used principally as a private residence on the residence premises shown in the Declarations. As to personal property, the Policy states that under Coverage B, State Farm covers personal property owned or used by an insured while it is anywhere in the world. Under the provision entitled LOSSES INSURED, the Policy divides itself into two categories of covered losses: (1) COVERAGE ADWELLING and (2) COVERAGE BPERSONAL PROPERTY. They state: COVERAGE ADWELLING We insure for accidental direct physical loss to the property described in Coverage A, except as provided in SECTION ILOSSES NOT INSURED. COVERAGE BPERSONAL PROPERTY We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in SECTION I LOSSES NOT INSURED: 1. Fire or lightning. 2. Windstorm or hail.... .... 3. Explosion. 4. Riot or civil commotion. 5. Aircraft.... 6. Vehicles.... 7. Smoke.... 8. Vandalism or malicious mischief.... 9. Theft.... 10. Falling objects..... 11. Weight of ice, snow or sleet.... 12. Sudden and accidental discharge or overflow of water or steam.... 13. Sudden and accidental tearing asunder, cracking, burning or bulging of a steam or hot water heating system.... 14. Freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system.... 15. Sudden and accidental damage to electrical appliances, devices, fixtures and wiring.... 16. Breakage of glass.... This action arises out of a claim for damage done to personal property; therefore, we turn to Coverage BPersonal Property. As listed above, Coverage B sets forth 16 specific perils for which personal property damages are covered. Because the provision is clear that an insured's personal property is only covered for damages caused by the 16 listed perils, this provision of the Policy can be described as providing specific perils or named perils coverage. See 7 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 101:7 at 101-17 (1997). A specific perils policy exclude[s] all risks not specifically included in the contract. Id. In other words, a specific perils policy provides coverage in accordance with the legal maxim expressio unius est exclusio alterius (the expression of one thing is the exclusion of the others), and is the converse of an all-risks or open perils policy, which provides coverage for all direct losses not otherwise excluded. See, 7 Russ & Segalla, supra at 101-17 to 101-18 (under all-risks policies all risks are included in the coverage unless specifically excluded in the terms of the contract); Annot., 30 A.L.R.5th 170 (1995) ([a]ll-risks insurance is a special type of insurance extending to risks not usually contemplated, and generally allows recovery for all fortuitous losses, unless the policy contains a specific exclusion expressly excluding the loss from coverage). Consequently, in order for there to be coverage for damage to personal property under the Policy, the damage to the personal property must arise out of one of the 16 listed perils. See, Curtis O. Griess & Sons v. Farm Bureau Ins. Co., 247 Neb. 526, 530, 528 N.W.2d 329, 332 (1995) ([i]n order to recover under an insurance policy of limited liability, the insured must bring himself or herself within its express provisions); Thorell v. Union Ins. Co., 242 Neb. 57, 492 N.W.2d 879 (1992); Barish-Sanders Motor Co. v. Fireman's Fund Ins. Co., 134 Neb. 188, 278 N.W. 374 (1938). See, also, Harrigan v. Liberty Mut. Fire Ins. Co., 170 A.D.2d 930, 566 N.Y.S.2d 755 (1991) (property insurance only provides coverage for harm caused by named perils); 10 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 148:48 at 148-84 (1998) (specific perils policy covers losses caused by specified perils; to the extent not specified, no coverage results). Here, both parties agree that mold is not a listed peril. Therefore, the Policy would not appear to provide coverage for damage to the Poultons' personal property. The Poultons, however, argue that coverage still exists via one of the Policy's resulting loss provisions. The disputed resulting loss provision is found in SECTION ILOSSES NOT INSURED, and states, in relevant part: 1. We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through n. below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these: .... i. mold, fungus or wet or dry rot; .... However, we do insure for any resulting loss from items a. through m. unless the resulting loss is itself a Loss Not Insured by this Section. (Emphasis supplied.) The Poultons argue that although damage to the dwelling caused by mold is excluded under i, coverage exists because (1) their loss of personal property was the result of the mold contamination of their insured dwelling and (2) the phrase any resulting loss suggests that all resulting losses, including losses to personal property, are covered. On the other hand, State Farm argues that under the Policy's plain language, the resulting loss provision provides coverage for loss to the dwelling (Coverage A) but does not provide coverage for loss to personal property (Coverage B). The meaning of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the lower court. R.W. v. Schrein, 264 Neb. 818, 652 N.W.2d 574 (2002). In construing insurance policy provisions, a court must determine from the clear language of the policy whether the insurer in fact insured against the risk involved. Austin v. State Farm Mut. Auto. Ins. Co., 261 Neb. 697, 625 N.W.2d 213 (2001). In an appellate review of an insurance policy, the court construes the policy as any other contract to give effect to the parties' intentions at the time the writing was made. Where the terms of a contract are clear, they are to be accorded their plain and ordinary meaning. Volquardson v. Hartford Ins. Co., 264 Neb. 337, 647 N.W.2d 599 (2002). Furthermore, the language of an insurance policy should be read to avoid ambiguities, if possible, and the language should not be tortured to create them. Guerrier v. Mid-Century Ins. Co., 266 Neb. 150, 663 N.W.2d 131 (2003). Although the parties cite numerous cases from other jurisdictions to support their respective arguments, our independent review leads us to conclude that the meaning of the Policy can be determined from its clear and unambiguous language. After reviewing the Policy, we conclude that under its plain language, the disputed resulting loss provision does not provide coverage for loss to personal property. As noted previously, under the provision entitled LOSSES INSURED, the Policy provides coverage for two main, and distinct, categories of losses: (1) to the dwelling (Coverage A) and (2) to personal property (Coverage B). We have already concluded that Coverage B is appropriately characterized as providing specific perils coverage for the Poultons' personal property. Our review of Coverage A leads us to conclude that this section of the Policy provides all-risks coverage for the dwelling, subject to a limited number of exclusions. Stated otherwise, under Coverage A, the Poultons' dwelling was insured against all risks except those specifically excluded in Section ILosses Not Insured, and under Coverage B, the Poultons' personal property was insured against loss caused by the listed perils except as provided in Section ILosses Not Insured. Thus, we must turn to Section ILosses Not Insured. This section is divided into three numbered paragraphs, and for clarity, the disputed paragraph is restated below: 1. We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through n. below, regardless of whether the loss occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these: .... i. mold, fungus or wet or dry rot; .... However, we do insure for any resulting loss from items a. through m. unless the resulting loss is itself a Loss Not Insured by this Section. We conclude that the plain language of paragraph 1 shows that the 14 listed exclusions (a through n) apply only to the dwelling (Coverage A). In other words, the listed exclusions, including the exclusion for mold, were drafted to operate as exclusions to the all-risks coverage provided for the dwelling under Coverage A. Furthermore, we conclude that the plain language of the Policy shows that the resulting loss paragraph, which immediately follows the 14 exclusions, was intended to be limited to the dwelling (Coverage A). Obviously, the resulting loss provision should be read in the context of where it is located, i.e., as a subset of paragraph 1. See 2 Eric Mills Holmes & Mark S. Rhodes, Holmes's Appleman on Insurance § 5.1 (2d ed. 1996). Because the 14 exclusions referenced in, and immediately subsequent to, paragraph 1 are clearly limited to the dwelling (Coverage A), it would be illogical to conclude that the resulting loss provision, which follows and references the same exclusions, is not likewise limited. See 2 Holmes & Rhodes, supra at 20 ([w]hatever the construction of a particular clause standing alone may be, it must be read in connection with other clauses ...). Simply put, the Poultons' interpretation must be rejected because they seek to expand the intended coverage of the Policy by plucking a provision out of the context in which it was meant to apply. See Bedrosky v. Hiner, 230 Neb. 200, 204, 430 N.W.2d 535, 539 (1988) (party may not pick and choose among the clauses of the contract, accepting only those that advantage it). Our reading of the Policy is further supported by the language used in the remaining two paragraphs of this section. As quoted above, paragraph 1 states that State Farm does not insure for any loss to the property described in Coverage A. Paragraphs 2 and 3, however, are expressly not so limited: 2. We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following.... 3. We do not insure under any coverage for any loss consisting of one or more of the items below. (Emphasis supplied.) Thus, while paragraph 1 is specifically limited to the dwelling (Coverage A), paragraphs 2 and 3 use the phrase under any coverage to refer to both, inter alia, the dwelling (Coverage A) and personal property (Coverage B). This distinction is important because it shows the resulting loss provisions which follow paragraphs 2 and 3 were intended to apply to both Coverages A and B, whereas paragraph 1 was intended to be expressly limited to Coverage A (the dwelling). In sum, we conclude that the Policy, under the resulting loss provision found in Section ILosses Not Insured, paragraph 1, does not provide coverage for the Poultons' loss of personal property.