Owner can seek separate claim for property damage coverage

December 29, 2014

Despite having agreed to pay $1.7 million, an insurance company may have to provide more money to satisfy a claim from the owner of a contaminated property.

FLM LLC had sought indemnification from The Cincinnati Insurance Co. for environmental problems that arose on its Indianapolis property after 10,000 tons of sand from a Chrysler foundry was left there.

Eventually, the parties agreed to an interpleader motion which paid FLM $1.7 million. Then, FLM filed a summary judgment asserting Cincinnati’s commercial general liability policy has separate $1 million limits for property damage coverage and personal injury coverage.

Marion Superior Court disagreed. It granted Cincinnati’s motion to reconsider and strike all references to property damage coverage from its prior order. The trial court also issued an order denying FLM’s summary judgment motion as to separate coverage limits.

In FLM, LLC v. The Cincinnati Insurance Co., et al., 49A02-1401-PL-17, the Indiana Court of Appeals reversed and remanded with instructions to enter summary judgment in favor of FLM.

The Court of Appeals found the commercial general liability policy offered by Cincinnati Insurance does have separate $1 million limits for personal injury coverage and property damage coverage.

Also, the Court of Appeals stated it was unaware of any rule of law that prevents an insurance company from providing overlapping coverage and the policy in the case does not prohibit it under the facts of this case.

The panel pointed to Indiana Court of Appeals Judge Cale Bradford’s reasoning in the first appeal, FLM 973 N.E.2d 1167 (Ind. Ct. App. 2012) which found that ambiguity in the policy could be referring to actions or the unintended consequences of those actions. Bradford held that the ambiguity must be resolved in favor of the coverage.

In this appeal, the Court of Appeals found property damage coverage is available under Cincinnati’s policy and that the plain language of the policy allows for different coverages arising from the same occurrence.



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