Defense Verdict Secured in Insurance Coverage Case

Background

The lawsuit arose out of an insurance claim submitted by Plaintiffs to the Insurance Carrier Defendant for coverage for alleged damage to their residence as a result of a pipe burst in February 2021. The pipe burst under the kitchen sink and Plaintiffs reported damage to the cabinetry, drywall, flooring, and baseboards.

Plaintiffs timely filed an insurance claim with the carrier, and the carrier timely acknowledged the claim in writing and began an investigation. Plaintiffs alleged the carrier’s scope of damage was incorrect and that they had not been properly compensated. More specifically, Plaintiffs claimed they were entitled to replacement of the engineered wood flooring on the stairwell and second floor, because the flooring was continuous and the pre-loss flooring on the stairwell and upstairs did not match the post-loss replacement flooring on the first floor. Plaintiffs sought damages for breach of contract, violations of the Texas Insurance Code, violations of the DTPA, and bad faith.

Analysis

There were two fact issues that determined if the policy provided coverage for the flooring on the stairwell and upstairs: (1) whether the flooring on the stairwell and upstairs was continuous with the downstairs flooring, and (2) whether it was damaged. Plaintiffs argued that the flooring was continuous with the first-floor flooring, and as a result, it should be covered under the policy. Plaintiffs also argued that: (1) the flooring Plaintiffs chose post loss for the first-floor repair did not match the pre-loss flooring on the stairwell and upstairs, and (2) that the policy provided coverage for matching.

Defendant argued that the flooring was (1) not damaged, (2) not continuous, because there was a wooden stair riser between the first-floor flooring and the flooring on the stairwell tread, and (3) that the policy did not provide coverage for matching flooring. To establish coverage, Plaintiffs had to prove that they suffered “direct physical loss” to property described in Coverage A of the Policy and they also had to prove that the flooring was continuous.

The jury found that the carrier Defendant did not breach the insurance policy and that there was no coverage provided by the policy, because there was no direct physical loss to the flooring on the stairwell and upstairs of the residence, and that the flooring on the stairwell and upstairs was not continuous with the first-floor flooring.  The jury also found that Plaintiffs were not owed additional money under Section 542 of the Texas Insurance Code.