Low, Ball & Lynch’s
WEEKLY LAW RESUME
January
27, 2005 Issue
By: Raymond Coates
Property Coverage - Exclusions -
Sewer Backup
Penn-America Insurance Company v.
Mike's Tailoring
Court of Appeal, Third District
(January 11, 2026)
No
Penn-America Insurance Company insured Mike's Tailoring under a property
policy. It excluded loss caused by water that backs up from a sewer or
drain.
A sewer pipe serviced Mike's premises and an adjacent property and ran
beneath the concrete floor of Mike's basement. The pipe was connected to
a cleanout pipe. They were joined beneath Mike's basement floor, and the
cleanout pipe ascended vertically at an angle until it entered the basement
floor of Mike's premises. Approximately 25 feet from the entrance, the
pipe broke. This allowed solid matter in the waste water to collect
at that point, resulting in a blockage. Water and waste accumulated and
came out of the pipe at the cleanout. This flooded Mike's basement and
damaged his property.
A trial court concluded the loss was covered because the sewer backup
exclusion applied only to damage caused by water, not damage caused by
pollutants carried by the water. Penn-America appealed.
The Court of Appeal reversed. The Court of Appeal found the exclusion
to be unambiguous. A lay person reading the policy would assume that the
backup of water from a sewer would contain both water and contaminants.
The exclusion thus would apply to this loss. The Court found no published
The Court found the efficient proximate cause analysis did not apply in this
case. That analysis only applies where a loss is caused by a combination
of covered and excluded risks. It does not apply where there is a loss
resulting from a single cause. In this case, the loss was caused by the
backup of the sewer pipe.
The Court rejected arguments that the term "backup" was
ambiguous. It further rejected the argument that the exclusion did not
apply if the blockage was within the insured premises. This was based upon
an argument that "sewer" refers to a public line and
"plumbing" refers to a private line. However, the Court noted
that there was no language in the policy to support this argument. There
was no coverage provision in the policy that included damage from the discharge
of water from a plumbing system. Thus, this argument had no relevance.
The Court concluded the sewer backup exclusion excluded loss or damage
caused by sewage and pollutants contained in the sewer water, and the loss was
excluded from coverage. The judgment was reversed.
COMMENT
This is a common exclusion which has received different treatment by various
insurers. This opinion should help clarify the approach to handling these
claims.
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