Sewage and Backups From Sewers—Always Check For the Changing Case Law

Case, statutory, and regulatory law changes. Insurance policies change language. Property insurance law is always in a state of flux. A fairly recent example is an Ohio case discussing sewage backup and overflow which found for a policyholder but was then reversed by the Ohio Supreme Court.1

The bottom line holding and discussion overruling the prior case is:

In this case, we are asked for the first time to interpret a provision that is found in just about every commercial and personal-property insurance policy issued in Ohio. Specifically, we are asked to decide whether an exclusion that bars coverage for damage caused by ‘water that backs up or overflows from a sewer’ includes damage caused by sewage carried into an insured property by a backup or overflow event. Based on the plain and unambiguous language in the policy before us, we hold that it does and therefore reverse the judgment of the Ninth District Court of Appeals.

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Obviously, ‘[w]ater that backs up or overflows from a sewer’ is going to contain sewage. In fact, there is no doubt that the average person purchasing insurance would understand this to be so. Capelouto v. Valley Forge Ins. Co., 98 Wash.App. 7, 17, 990 P.2d 414 (1999). After all, sewers carry a watery mixture that most people typically call ‘sewage.’ See Webster’s Third New International Dictionary 2081 (2002) (defining a ‘sewer’ as a ‘conduit to carry off water and waste matter’ and defining ‘sewage’ as ‘refuse liquids or waste matter carried off by sewers’).

Notwithstanding the plain and unambiguous language in the policy, the Ninth District reached a contrary conclusion on the coverage question presented here, finding the water-backup exclusion ambiguous and in need of strict construction….To reach that result, the court of appeals relied on an anomalous and unreported decision, which concluded that a different water-backup exclusion was ambiguous because it also did not specifically use the word ‘sewage.’ …see Fairlawn Properties, Inc. v. Liberty Mut. Ins. Co., 9th Dist. Summit No. 10671, 1982 Ohio App. LEXIS 12282, 1982 WL 5163, (Dec. 8, 1982). Both the dissenting opinion and AKC would have us adopt that reasoning now. We decline to do so, however.

The bottom line is that nothing stays the same in the property insurance business. You can be an expert one day but way behind if you do not constantly stay vigilant about learning.

Thought For The Day

The more that you read, the more things you will know. The more that you learn, the more places you’ll go.
― Dr. Seuss
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1 AKC, Inc. v. United Specialty Ins. Co., 166 Ohio St.3d 460, 187 N.E.3d 501 (Ohio 2021).