Federal Judge Says Wording in Acuity Policy is Ambiguous

A recent ruling by an Illinois federal judge against Acuity Mutual Insurance Co., found that the use of the word “commencing” is ambiguous as it relates to whether a loss occurs within the policy period.

The case, Temperature Service Company, Inc., and SSV Partners LLC v. Acuity, A Mutual Insurance Company, stems from a commercial property loss where urban backfill allegedly caused differential settlement. The plaintiffs commercial property, which was constructed sometime around 1980, was insured with Acuity between January 1, 2013 and January 1, 2014.

The plaintiffs alleged that the urban backfill, made up of construction debris, asphalt, concrete and other man-made materials, caused cracks in the foundation, steps and drywall and damage to windows and doors. In the underlying suit, plaintiffs stated that the damage is ongoing.

Because plaintiffs could not define a date of loss within the policy term, Acuity denied coverage.

Acuity filed a motion for summary judgment to decide the issue of coverage. In the decision, the court ruled that because there was no definition of “commencing” within the Acuity policy, the term was considered ambiguous. The court stated, “The Acuity policy may reasonably be read to include each identifiable instance of new damage or loss, regardless of whether similar damage or loss, or damage or loss with a common but chronologically distinguishable cause, commenced prior to the policy period.”

In addition, the court cited two more reasons why it could not rule in favor of the insurer. First, there was suggestion from the experts and evidence provided thus far, along with Acuity’s admission, that damage continues to progress. Second, there was not enough expert testimony to consider using it as a way to resolve the fact questions related to the loss.