New York Court Finds Ambiguity in Exception for Explosions

August 1, 2012:  Demotech’s Legal Counsel and Compliance Manager, Burke Coleman, recently analyzed a court’s decision finding ambiguity in an exception to a water loss exclusion in a homeowner’s insurance policy.

In Platek v. Town of Hamburg, 2012 N.Y. Slip Op. 5459, the court found that an exclusion for water loss and an exception to the exclusion for explosions were ambiguous when applied to a ruptured water main.  While the insurer argued that the explosion exception was an ensuing loss provision and did not apply, the majority of the court agreed with the homeowners that the exception could reasonably be interpreted to cover loss resulting from an explosion of the water main.  Following standard principles of policy interpretation, the ambiguity was construed against the insurer and the homeowners were entitled to coverage.  The court strictly interpreted the provisions in a technical manner to find the ambiguity, but two dissenting justices, applying a more natural interpretation of the policy, found the majority’s interpretation unreasonable and agreed with the insurer that the provision was an ensuing loss provision.

The decision is one of the more interesting opinions relating to policy language interpretation and is a reminder to insurers that clarity is paramount in a policy.  The entire article can be read at

Mr. Coleman’s column, “Burke’s Law,” analyzes recent court decisions affecting the insurance industry and appears monthly at