The Massachusetts Supreme Judicial Court ruled that rainwater accumulating on roofs does not constitute “surface waters” under property insurance policies. This decision stems from a dispute involving Medical Properties Trust, Inc. and Steward Health Care System regarding water damage at Norwood Hospital after a storm in June 2020.
Ambiguity in Policy Terms
The court found the term “surface waters” ambiguous within the context of the insurance policies issued by Zurich American Insurance Co. and American Guarantee and Liability Insurance Co. This ambiguity must be resolved in favor of the insured, allowing for higher coverage limits than those for flood damage.
Impact on Policyholders
This ruling favors the policyholders, enabling them to claim higher amounts for roof water damage rather than being limited by the lower flood coverage sublimits. The decision underscores the importance of clear definitions in insurance policies to avoid such disputes.
Broader Implications
The case highlights the need for insurers to explicitly define terms within their policies to prevent similar ambiguities in the future.