Opinion ID: 1938205
Heading Depth: 2
Heading Rank: 1

Heading: damage resulting from named peril

Text: Appellant first contends that the court erred in not finding as a matter of law that the damage to contents of appellee's factory by flooding did not constitute damage caused by a named peril under the property damage clause of the contract. The law of Pennsylvania requires that an insurance policy be construed in accordance with its plain, common, and ordinary meaning. Courts cannot rewrite the terms of the policy or give them a construction in conflict with the accepted and plain meaning of the language used. Adelman v. State Farm Mut. Auto. Ins. Co., 255 Pa.Super. 116, 123, 386 A.2d 535, 538 (1978) (citing Pennsylvania Manuf. Assoc. Ins. Co. v. Aetna Cas. & Surety Ins. Co., 426 Pa. 453, 233 A.2d 548 (1967)); see also Monti v. Rockwood Ins. Co., 303 Pa.Super. 473, 476, 450 A.2d 24, 25-26 (1982). When a word or phrase is specifically defined within the policy, that definition controls in determining the applicability of the policy. See Great Am. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 412 Pa. 538, 194 A.2d 903 (1963). Moreover, it is the duty of the court to interpret an unambiguous provision while interpretation of ambiguous clauses may properly be left to a jury. See Koval v. Liberty Mut. Ins. Co., 366 Pa.Super. 415, 423, 531 A.2d 487, 491 (1987). The property damage insurance policy in the instant case included a named perils clause which covered appellee's factory. Under this provision, the jury awarded $180,800.00 for property damage in appellee's factory. [3] The only arguably applicable portion of the property policy is the clause concerning fire protective equipment. This provision insured against direct loss by: water or other substance discharged from within any part of the fire protective equipment for the premises described herein or for adjoining premises; See Property Damage Policy at Property Damage No Coinsurance at 5, para. D (R.R. at 43A). The policy went on to define fire protective equipment as follows: The term fire protective equipment includes tanks, water mains, hydrants, or valves, and any other equipment whether used solely for fire protection or jointly for fire protection and for other purposes but does not include:       (2) any underground water mains or appurtenances located outside of the described premises and forming a part of the public water distribution system; Id. (emphasis supplied). At trial, no evidence was introduced to suggest that the water main that burst was any part of the fire protective equipment in the plant. Indeed, it is undisputed that the flooding of appellee's plant on August 13, 1981 was caused by the break of an underground water main maintained by the City of Philadelphia outside the premises. See N.T. November 20, 1985 at 4.48, 51; see also N.T. November 18, 1985 at 38. Appellant contends that this fact alone precludes coverage under the unambiguous language of the named peril policy because the source of the water was not a named peril and, indeed, specifically was excluded from coverage. Despite the explicit language in the contract quoted above, appellee argues that the jury properly returned a verdict in its favor because (1) the exclusion of public water mains was unconscionable; (2) appellee's attention was not directed to the provision that would preclude the coverage; and (3) appellee reasonably expected to be covered for this type of occurrence under his policy. Appellee's claims are lacking in merit. Appellee first argues that the insurance contract was unconscionable because it purported to give coverage in one portion and take it away in another. [4] In Koval v. Liberty Mut. Ins. Co., supra , our Court noted that, for a contract to be unconscionable, the court must find that (1) the party claiming unconscionability lacked a reasonable choice whether to accept the provision in question and (2) the challenged provision unreasonably favored one party to the contract. See id., 366 Pa.Superior Ct. at 423-24, 531 A.2d at 491. Here, the evidence adduced at trial establishes neither part of this test. The language quoted above clearly states that underground water mains not on appellee's property are not covered under the policy. Importantly, we note that appellee chose to purchase this named perils insurance even though it had the option of purchasing a policy with broader coverage. See N.T. November 22, 1985 at 6.79-6.80. [5] Because the language about coverage is clear and explicit and appellee had an option to purchase greater coverage, we cannot conclude that appellee did not have a reasonable choice whether to accept the provision. Moreover, we cannot find that the limitation clause unreasonably favors appellant. Appellant appears to have attempted to limit its coverage to perils that are within appellee's dominion and control. This was reasonable because appellant also included in the policy a right of appellant to inspect the premises, in an attempt to minimize the risk of named perils occurring. The mere fact that the contract does not provide the broadest possible coverage does not render the contract unreasonably one-sided. Accordingly, appellee's unconscionability argument must fail. Appellee's second argument would seem to be that, when a policy has exclusions, the insurer has an affirmative burden to show that the insured was aware of the exclusion and its effect. See Hionis v. Northern Mut. Ins. Co., 230 Pa.Super. 511, 327 A.2d 363 (1974) (insurer failed to offer proof of insured's awareness and understanding of policy exclusions; therefore, policy construed in favor of insured). Our Supreme Court has specifically rejected this argument in Standard Venetian Blind Co. v. American Empire Ins., 503 Pa. 300, 306, 469 A.2d 563, 567 (1983), holding that when exclusions are clearly stated in a policy, the insured is bound by the terms of the contract it signed. Id.; see also Kershner v. Prudential Ins. Co., 382 Pa.Super. 95, 100, 554 A.2d 964, 966 (1989). In light of Standard Venetian and its progeny, and our conclusion above that the exclusion was explicitly stated, appellee clearly cannot avoid the exclusion simply because appellant did not further emphasize it during negotiations. Appellee's final argument is that the construction urged by appellant would defeat its reasonable expectation under this policy. As we have already noted, when the language of a contract is clear, the court must apply the language of the contract as written and cannot rewrite the terms of the policy. See Adelman v. State Farm Mut. Auto. Ins. Co., supra . Moreover, the record reveals that appellant had an opportunity to purchase broader coverage, but instead chose to purchase the policy at issue. See N.T. November 22, 1985 at 6.79-6.80 (quoted above at n. 5). Appellee cannot now complain of its own informed choice. Accordingly, this argument must also fail. In summary, we agree with appellant that the terms of the policy are clear and unambiguous, and specifically excluded coverage for the type of loss occasioned here. Thus, the trial court should have directed a verdict for appellant in this claim. Accordingly, we vacate the award of $180,800.00 for property damage resulting from a named peril.