Court overturns summary disposition in favor of insured; Auto-Owners granted trial on exclusion and damage limits imposed
Thomas and Kristin Kennedy suffered extensive water damage to the home they had insured with AutoOwners. The Kennedys were attempting to sell the home after moving to a new home. They had initiated several precautions (including enhanced insulation, use of multiple furnaces, using a "winter watchman" temperature monitoring device and making regular visits to the home) to prevent the pipes from freezing, but AutoOwners contended that they remained subject to a policy exclusion that denied any coverage for damages caused by freezing pipes "unless you take precautions...(b) [to] maintain heat in the building."The trial judge had found the above phrase to be ambiguous and ruled that the Kennedys, having taken "precautions," were entitled to judgment as a matter of law. AutoOwners appealed, arguing that the precautions instituted by the Kennedys were inadequate to meet the above definition and that the Kennedys had allowed their natural gas to become exhausted.
The Court of Appeals sent the case back to the lower court for trial, finding that the exclusionary clause was not ambiguous and that a question of fact had been raised with regard to whether the family had "taken precautions to maintain heat." The Court also ruled that the Kennedys could not sue for "consequential" damages resulting from AutoOwners' alleged breach of the insurance contract. In this case, the "consequential" damages were damages alleged to have resulted from the Kennedy's inability to sell the house without effecting repairs and its eventual foreclosure by the mortgage holder.