Opinion ID: 3008468
Heading Depth: 1
Heading Rank: 3

Heading: “. caused by water damage .”

Text: Nor can we disregard how this policy provision starts (“We do not cover loss caused by mold”) because of how it ends (“We do cover ensuing loss caused by water damage”), as the latter is not as broad as the Fiesses suggest. By its own terms, paragraph 1(f) covers only ensuing losses from water damage , not water alone. The parties disagree whether mold stemming from the small roof and window leaks at issue here would constitute “water damage.” [26] While we have never construed “water damage” in the Texas homeowners ensuing-loss clause, the legendary Henry Friendly [27] did (sitting with the Fifth Circuit by designation), and concluded that inadequate ventilation that led to condensation that eventually caused a floor to rot away did not fall within the Texas ensuing-loss clause because the rot was caused by water, not “water damage”: We do not think that a single phenomenon that is clearly an excluded risk under the policy was meant to become compensable because in a philosophical sense it can also be classified as water damage; it would not be easy to find a case of rot or dampness of atmosphere not equally subject to that label and the exclusions would become practically meaningless. In our case the rot may have ensued from water but not from water damage, and the damage ensuing from the rot was not the damage from the direct intrusion of water conveyed by the phrase “water damage.” [28] Surely Judge Friendly was correct. Mold does not grow without water; if every leak and drip is “water damage,” then it is hard to imagine any mold, rust, or rot excluded by this policy, and the mold exclusion would be practically meaningless. The 15 risks excluded by paragraph 1(f) — rust, rot, mold, humidity, wear and tear, hot and cold weather, rats, termites, and so on — all damage a home incrementally; when they cause major damage, generally the home was not destroyed in a day. These 15 risks are also very common; construing the HO-B policy to cover them all would convert it from an insurance policy into a maintenance agreement. Instead, the ensuing-loss clause provides coverage only if these relatively common and usually minor risks lead to a relatively uncommon and perhaps major loss: building collapse, glass breakage, or water damage. In construing the last term, we are governed by the traditional canon of construction noscitur a sociis — “that a word is known by the company it keeps.” [29] Accordingly, “water damage” like its neighbors “building collapse” and “glass breakage” must refer to something more substantial than every tiny water leak or seep. Applying this traditional rule of construction, ordinary people would read paragraph 1(f) to provide coverage for the kinds of uncommon and catastrophic losses for which homeowners obtain insurance, not for the common maintenance items for which they do not. We need not decide today the precise scope of “water damage” in the ensuing-loss clause, an issue not framed by the certified question. The issue we do decide is that a policy exclusion for “mold” cannot be disregarded by simply deeming all mold to be “water damage.”