A Michigan federal judge recently granted a large plant-growing company’s summary judgment motion in a case against its insurer over coverage for thousands of plants that died following a cooling system breakdown. Not surprisingly, the court based its ruling on the interpretation of the language of the insurance policy.
The business and plaintiff in the case, Sawyer Nursery, has 300 greenhouses in Michigan and suffered a power outage that disabled the blower fans that keeps its plants from wilting. The plants died, and the company filed its claim with its insurer, the New Hampshire Insurance Co. But the insurance company reimbursed Sawyer only $5,000 for spoilage, while Sawyer claimed that its policy’s growing stock endorsement should cover all $237,000 of the total loss sustained during the incident.
The judge agreed with Sawyer Nursery, rejecting the insurance company’s argument that the loss was excluded under the “Stock Provision” in the insurance policy. Though the policy contained a specific stock exclusion, the policy provided coverage for “growing stock’ that was not specifically excluded. The stock itself was considered to be raw material or finished products being stored in anticipation of a sale. But “growing stock” was considered to be plants that are still being cultivated. The court ruled that the damaged growing stock was covered and therefore not excluded as”Stock.”
Because the insurance company’s policy language was not broad enough to exclude the damaged growing stock, Sawyer Nursery’s loss was covered.
What is the takeaway? Don’t accept an insurance company’s determination as to what is and what is not covered without first consulting with a qualified lawyer.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack