Typical first party property policies include provisions that address failure to maintain heat as excluded losses. The Eastern District of New York recently analyzed a specific endorsement requiring that heat be maintained at a particular temperature.
In Read Prop. Group LLC v. Hamilton Ins. Co., No. 16-4573, 2018 U.S. Dist. LEXIS 54734 (E.D.N.Y. Mar. 30, 2018), a loss occurred when pipes froze and burst, causing water damage at one of 362 properties insured by the policy. The court determined that the policy’s Protective Safeguards—Heat Maintained Endorsement consisted of “two distinct yet related provisions.” The first “imposes a duty on the insured and a condition precedent to coverage by requiring the insured ‘to maintain an ambient temperature of not less than 50° Fahrenheit at all times throughout any [insured] building.’” The court found that the second provision “conditions the insurer’s performance under the insurance contract on the existence of an ambient temperature not less than fifty degrees Fahrenheit.” The court rejected the Plaintiff’s argument that the term “maintain” as used in the first paragraph is ambiguous and should include a “reasonable care” standard, and determined that “it is unreasonable to interpret the first provision as imposing anything less than an absolute duty on the insured.” The court also determined that the second paragraph “expressly and unconditionally excludes coverage for sprinkler leakage, weight of snow, or water damage if the temperature was less than fifty degrees Fahrenheit for any reason at the time of the loss, regardless of the insured’s efforts to comply with the condition.” Finally, the court rejected the insured’s argument that the policy language was unenforceable on public policy grounds, stating that there is a “reluctance to find insurance policy clauses violative of public policy [which] results from the strong tradition of freedom of contract that is deeply rooted in [New York’s] public policy.” Because it was undisputed that the pipes in the insured premises froze, and that the freezing point of water is 32 degrees Fahrenheit, the court granted summary judgment to the insurer.
The Read case provides useful insight as to how an insured’s unreasonable attempt to create an ambiguity in an insurance policy will be rejected by a thorough analysis of all policy provisions.