Opinion ID: 2302385
Heading Depth: 1
Heading Rank: 4

Heading: What is a loss?

Text: There can be little dispute that when they undertook the significant remedial measures that were necessary to make their home compliant with the building code, plaintiffs suffered a loss. However, Peerless maintains that this is not the type of loss that would provide coverage under the policy, and that this type of loss is in fact specifically excluded when one reads the policy in its entirety. In interpreting the contested terms of the insurance policy, we are bound by the rules established for the construction of contracts generally. Malo v. Aetna Casualty and Surety Co., 459 A.2d 954, 956 (R.I.1983) (citing Colagiovanni v. Metropolitan Life Insurance Co., 57 R.I. 486, 190 A. 459 (1937)). It is well-settled that this Court shall not depart from the literal language of the policy absent a finding that the policy is ambiguous. Lynch v. Spirit Rent-A-Car, Inc., 965 A.2d 417, 425 (R.I.2009) (quoting Mallane v. Holyoke Mutual Insurance Co. in Salem, 658 A.2d 18, 20 (R.I.1995)). The terms of the policy shall be given their plain, ordinary, and usual meanings. See Bliss Mine Road Condominium Association, 11 A.3d at 1083 (citing Mallane, 658 A.2d at 20). This Court considers the policy in its entirety and will not strain to find an ambiguity by viewing a word in isolation or by taking a phrase out of context. Id. (quoting Amica Mutual Insurance Co. v. Streicker, 583 A.2d 550, 552 (R.I. 1990)). Indeed, as this Court often has said, we shall refrain from engaging in mental gymnastics or from stretching the imagination to read ambiguity into a policy where none is present. Id. (quoting Mallane, 658 A.2d at 20). Nonetheless, we will hold a policy's terms to be ambiguous if, in light of this analysis, they are reasonably susceptible of different constructions. Id. at 1084 (quoting Westinghouse Broadcasting Co. v. Dial Media, Inc., 122 R.I. 571, 579, 410 A.2d 986, 991 (1980)). The subjective intent of the parties is irrelevant in reaching this conclusion. See id. at 1083-84. An ambiguity in an insurance policy is strictly construed against the insurer. See id. at 1085 (citing Sullivan, 633 A.2d at 686; Bartlett, 593 A.2d at 47). We have no trouble concluding that, despite being cloaked with the label summary, the terms cited by plaintiffs are part of their homeowner's insurance policy and that they should be considered together with the other terms of the agreement. In Sentry Insurance Co. v. Grenga, 556 A.2d 998, 1000 (R.I.1989), this Court held that it was proper to consider a declaration page together with a plain talk insurance policy pamphleta separate and distinct document that explained the parties' insurance coverage. Here, the propriety of examining the coverage summary is nearly self-evident: it is not a disconnected document, but rather is integrated within the four corners of the contract itself. The defendant cites this Court's holding in Streicker to support its argument, but the circumstances here are markedly different from those presented in that case, in which the plaintiff's argument for ambiguity rested on an interpretation of isolated language found in an Information Digest that the insurance company sent to the insureds, separate and apart from the policy. See Streicker, 583 A.2d at 552. Peerless also maintains that coverage for ordinance or law compliance, regardless of the language in the coverage summary, applies only after a covered loss. Although we do not doubt that Peerless may have intended that result in crafting its policy, in our opinion, after considering the totality of the agreement, the terms of the insurance contract are ambiguous. We begin with the language of the summary, which boasts that the Special Ultra Plus endorsement provides a lot of protection for a nominal premium charge. The phrase covered loss does not appear in the summary. The summary does state, Ordinance or Law Compliance for Buildings ( required after a loss ) ... Included. In our opinion, an ordinary reader would interpret those terms to mean that if an insured suffers a loss, and as a consequence of that loss needs to repair the property to comply with applicable laws, then the cost of the repair is covered by the policy. Nonetheless, a reasonably intrepid reader might be left with a question: what is a loss? We agree with Peerless that the notation at the bottom of the summary directing readers to consult the policy for a complete description of coverages and limits encourages an insured to continue reading. See Streicker, 583 A.2d at 552-53 (considering policy language when the information digest contained a disclaimer directing a reader to the policy for full coverage details). Thus, the question that lies at the heart of this analysis is whether the policy's other terms, when read in concert with the information on the summary page, are sufficiently clear so that an ordinary reader would understand the nature of the coveragewhat is covered, and what is not. In venturing beyond the relative safety and clarity of the insurance policy's summary page, an adventurous reader is soon tangled in a bewildering thicket of verbiage; he is tasked first with slicing his way through a Gordian knot of sections, subsections, cross-references and clauses, and then with making sense of the path he has cut. [3] The plaintiffs' policy defines neither the term loss nor the phrase covered loss; the only definition bearing any similarity is for the term occurrence, which is defined simply as an accident    which results, during the policy period, in:    `[p]roperty damage.' [4] Intuitively, a steadfast reader might seek an alternative route and look for a section of the Special Ultra Plus endorsement titled Ordinance or Law Compliance. [5] Alas, he would discover that there is no such section: the endorsement contains no apparent explanation of anything called ordinance or law compliance. [6] The only reference to ordinance or law in the Special Ultra Plus endorsement is found in the section labeled Conditions, under the subheading loss settlement. It says: Loss for damage resulting from a Peril Insured Against, to covered property will be settled on the basis of any ordinance or law that regulates the construction or repair, or requires demolition of this property. In essence, Peerless argues that plaintiffs should have turned to the main body of the policyand not to the terms of the endorsementand consulted Section I, which is entitled Perils Insured Against. Under that title is a separate subpart: Exclusions. In subsection (2)(c)(2) of Exclusions, plaintiffs would have discovered, as if on a scavenger hunt, the terms of the faulty-workmanship exception. Even assuming that plaintiffs reasonably could have been expected to weave their way through the policy, bouncing like a pinball from section to section to eventually reach the faulty-workmanship exclusion, we do not agree with Peerless that the language of the exclusion, when considered in light of the whole policy, is itself clear and unambiguous. The faulty-workmanship provision begins by stating, We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered.  (Emphasis added.) In our opinion, the terms of this exclusion, when read in concert with the terms of the coverage summary for the Special Ultra Plus endorsement, create an ambiguity. The coverage summary comforts an insured that the extra endorsement provides a lot of coverage and that ordinance or law compliance is included. Thus, an ordinary purchaser could reasonably conclude that the additional endorsement, for which he has paid an increased premium, covers the ensuing loss resulting from having to comply with the building code, even if the initial loss due to faulty workmanship was not covered. [7]