Coverage Excluded Cannot be Changed to Coverage Provided
Barry Zalma
Nov 28, 2023
Read the full article at https://lnkd.in/gq_h368T and see the full video at https://lnkd.in/g2ijSm2Z and at https://lnkd.in/gUm6gdtu and at https://zalma.com/blog plus more than 4700 posts.
An insurance coverage dispute that involved a commercial insurance policy (“the Policy”) that plaintiff, Winfire Management, LLC (“Winfire”) held with defendant, Massachusetts Bay Insurance Company (“Mass Bay”). The trial court concluded that the Policy covered Winfire’s business-income losses that resulted from a sewer backup and entered judgment in Winfire’s favor. Mass Bay appealed.
In Winfire Management, LLC v. Massachusetts Bay Insurance Company, No. 362960, Court of Appeals of Michigan (November 21, 2023) the Court of Appeals read the policy as written and resolved the dispute.
BACKGROUND
Winfire’s claim for lost rental income following a July 2020 sewer backup at one of Winfire’s commercial properties was refused by Mass Bay. Winfire sued Mass. Bay for breach of contract for refusing to cover these business-income losses. Soon after, Mass. Bay moved for summary disposition arguing that the Policy did not provide business-interruption coverage for losses from a sewer backup.
Mass Bay conceeded that the Policy covered physical damage from sewer backups it explained that taking together the policy provisions in the Business Income (And Extra Expense) Coverage Form (“the BI Form”) and the Causes of Loss -Special Form (“the CL Form”), the Policy excluded coverage for lost business income from a sewer backup.
In response, Winfire disputed Mass. Bay’s interpretation of the Policy. Winfire argued that, because the Policy covered property damage from sewer backups under the Gold Property Broadening Endorsement (“the GP Endorsement”), a sewer backup was a covered loss triggering business-income loss coverage under the BI form.
The trial court agreed with Winfire . Accordingly, the court held, as a matter of law, that the Policy covered Winfire’s business-income losses from the July 2020 sewer backup.
PRINCIPLES OF LAW
The sole issue on appeal is whether the Policy covered Winfire’s business-income losses resulting from the sewer backup. When an insurance company argues that a policy exclusion negates coverage, the insurance company has the burden to prove that one of the policy’s exclusions applies. Consistent with the rules of interpretation, clear and specific exclusions will be enforced as written so that the insurance company is not held liable for a risk it did not assume.
ANALYSIS
Winfire’s commercial property insurance policy with Mass. Bay provided blanket building coverage, blanket business-income coverage, and blanket personal property coverage. There is no dispute that evaluating Winfire’s claim for business-income losses begins with the BI form. The BI form governs business-income coverage and states that a claimed business income loss “must be caused by or result from a Covered Cause of Loss.”
The BI policy provided that:
"Exclusions
"We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
"Water
"(3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment …."
The Policy explicitly excluded coverage for business-income losses from a sewer backup. The CL form controls what constitutes a Covered Cause of Loss to trigger business-income coverage under the Policy. Per the CL form, a Covered Cause of Loss under the BI form excludes losses caused directly or indirectly by water that backs up, overflows, or is discharged from a sewer.
The amendment providing property coverage for sewer backup amendment was added to “Additional Coverages” in the “Building and Personal Property Coverage Form.” It was not added to the BI form. That change explains why Mass. Bay covered the “direct physical loss or damage” to Winfire’s property that resulted from the sewer backup. The GP Endorsement did not amend the sewer backup exclusion referenced in the CL form that precludes coverage for business-income losses.
The Policy unambiguously excluded coverage for Winfire’s business-income losses stemming from the sewer backup. The Court of Appeals noted that a court must enforce insurance policy exclusions that are clear and specific exclusions.
Therefore, the trial court’s judgment for Winfire was reversed and remanded for entry of an order granting summary disposition for Mass. Bay.
ZALMA OPINION
The insured tried to convince the Court of Appeals that when an insurer changes a policy to provide sewer backup coverage for property damage it must also provide similar coverage for BI losses. Although the imaginative and well presented argument convinced the trial court the Court of Appeal read the entire policy and noted that the amendment only applied to property damage and not to BI losses. Failure to read the full policy caused Winfire and the trial court to err and caused the trial court’s order to be reversed.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at locals.com at https://zalmaoninsurance.locals.com/subscribe or at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Follow me on LinkedIn: http://www.linkedin.com/comm/mynetwork/discovery-see-all...
Daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – http://zalma.com/blog/insurance-claims-library.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to Excellence in Claims Handling at substack at https://lnkd.in/gcZKhG6g
Go to Newsbreak.com https://lnkd.in/g8azKc34
Go to Newsbreak.com https://lnkd.in/g8azKc34; Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to the Insurance Claims Library – https://lnkd.in/gwEYkxD.
Intentionally Shooting a Woman With A Rifle is Murder
Post 5196
See the full video at and at and at https://zalma.com/blog and more than 5150 posts.
You Plead Guilty You Must Accept the Sentence
In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.
Affirmation of Sentence:
The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.
Reasonable Inference on Trigger Pulling:
The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.
Guilty Plea Facts:
The appellant admitted during the plea hearing...
The Judicial Proceedings Privilege
Post 5196
Posted on September 25, 2025 by Barry Zalma
See the full video at and at
Judicial Proceeding Privilege Limits Litigation
In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.
The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.
Case background:
Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...
Misrepresentation or Concealment of a Material Fact Supports Rescission
Post 5195
Don’t Lie to Your Insurance Company
See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.
In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.
FACTS
Plaintiff's Application:
Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.
Misrepresentation:
Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.
Accident:
Plaintiff's SUV was involved in an accident on August ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...