Water damage cover under a property policy excluded losses from “water that backs up or overflows or is otherwise discharged from a sewer, drainpipe …” except as provided for in additional coverage. The additional coverage insured “water that backs up or overflows from a sewer or drainpipe” but “the most we will pay for loss or damage under this coverage is $5 000 per building.

Despite some fanciful arguments by the insured who was looking for cover of $59 000 for its damages, the court found that the terms of the policy did not cover the water damage at issue unless the insured secured the additional, limited coverage. The insured’s argument that the $5 000 was in addition to the limits of the policy as a whole was unreasonable and illogical. The policy language was not ambiguous even where construing all reasonable inferences in favour of the insured. The amount of $5 000 paid by the insurer was held to be the maximum indemnity under the policy.

It would be hard to think of less ambiguous language than that. The same result would follow in South Africa on such wording.

[Simmons Little Bluestone LP v Nationwide Insurance Co of Florida case no 2:22-cv-02822 in the United States District Court for the Western District of Tennessee Western Division]