State Farm Adjuster’s View Cannot Override Sewage Backup Policy Exclusion in Mississippi
In a recent ruling, the U.S. 5th Circuit Court of Appeals emphasized that insured individuals cannot solely depend on the statements of insurance adjusters—regardless of whether they are hired by the insurer—to determine coverage for sewage backup under homeowners’ policies. This case, Cooper vs. State Farm Fire & Casualty, highlighted the importance of policy exclusions while also raising significant questions about the responsibilities of insurance companies.
The situation faced by the Coopers, a family residing in Canton, Mississippi, was particularly distressing. After returning home from choir practice in 2022, they discovered sewage overflowing from their shower and tub drains, contaminating multiple rooms in their 4,600-square-foot home, which was only three years old. The court detailed the unfortunate circumstances surrounding their case.
Upon discovering the sewage issue, the Coopers contacted a restoration company and promptly notified State Farm. They had purchased a homeowners’ policy that explicitly excluded coverage for sewage originating “from outside the premises’ plumbing system.” Although they had added an endorsement covering sewer backups, it was limited to just 5% of Coverage A.
Initially, the adjuster sent by State Farm informed the Coopers that their damage was covered because the sewer drainpipe had cracked on their property. However, a second adjuster later revised this assessment, stating that the primary policy did not apply, leading to the denial of their claim.
In response, the Coopers filed a lawsuit against State Farm, alleging breach of contract, bad faith, and intentional infliction of emotional distress. However, a federal judge in the Southern District of Mississippi granted State Farm’s motion for summary judgment, dismissing the case based on the clear exclusion of coverage for damages caused by sewage from outside the premises.
Water damage exclusions are becoming increasingly prevalent in homeowners’ primary policies across the nation, with some policies excluding all sewage backups, regardless of their origin.
On appeal, the 5th Circuit upheld the district court’s dismissal. Judge Leslie Southwick noted that under Mississippi law, an insurer’s representative can only bind the insurer with statements authorized by the company. The Coopers failed to provide evidence that State Farm had authorized the adjuster to alter the policy terms.
Furthermore, the court pointed out that the Coopers did not demonstrate that the sewage originated from their home’s plumbing system. A letter from the municipal utility denied liability, asserting that a burst pipe on their property caused the backup, which was linked to issues with the home’s sewage grinder pump.
While one plumber agreed that the backup was not due to off-premises issues, another found that a cracked connection in the drainpipe and the absence of a redundancy valve on the grinder pump allowed sewage from the city’s system to backflow into the home. This conflicting evidence created a factual dispute that the Coopers’ attorney, Ed Blackmon Jr., argued should be resolved by a jury.
The appellate judges concluded that while the cause and location of the problem were in dispute, the sewage appeared to originate from off-premises. They noted that the utility’s letter confirmed that the grinder pump’s failure contributed to the backup but did not clarify the source of the sewage.
State Farm’s legal team, led by Amanda Barbour, argued that the plumbers’ opinions were not significantly different and that the adjuster’s comments did not alter the policy. The court also relied on an expert witness for State Farm, who stated that it was impossible for sewer water from on-premises to have flooded the home when no plumbing fixtures were in use.
Judge Andrew Oldham dissented, criticizing State Farm for creating the impression that the adjuster had the authority to approve coverage. He argued that State Farm should be held accountable in front of a jury for misleading the Coopers about their coverage.
The full opinion and dissent can be viewed here.
Related: Appeals Court Weighs in on Brokers’ Duty in Securing Adequate Coverage
Topics
Mississippi
State Farm
In a recent ruling, the U.S. 5th Circuit Court of Appeals emphasized that insured individuals cannot solely depend on the statements of insurance adjusters—regardless of whether they are hired by the insurer—to determine coverage for sewage backup under homeowners’ policies. This case, Cooper vs. State Farm Fire & Casualty, highlighted the importance of policy exclusions while also raising significant questions about the responsibilities of insurance companies.
The situation faced by the Coopers, a family residing in Canton, Mississippi, was particularly distressing. After returning home from choir practice in 2022, they discovered sewage overflowing from their shower and tub drains, contaminating multiple rooms in their 4,600-square-foot home, which was only three years old. The court detailed the unfortunate circumstances surrounding their case.
Upon discovering the sewage issue, the Coopers contacted a restoration company and promptly notified State Farm. They had purchased a homeowners’ policy that explicitly excluded coverage for sewage originating “from outside the premises’ plumbing system.” Although they had added an endorsement covering sewer backups, it was limited to just 5% of Coverage A.
Initially, the adjuster sent by State Farm informed the Coopers that their damage was covered because the sewer drainpipe had cracked on their property. However, a second adjuster later revised this assessment, stating that the primary policy did not apply, leading to the denial of their claim.
In response, the Coopers filed a lawsuit against State Farm, alleging breach of contract, bad faith, and intentional infliction of emotional distress. However, a federal judge in the Southern District of Mississippi granted State Farm’s motion for summary judgment, dismissing the case based on the clear exclusion of coverage for damages caused by sewage from outside the premises.
Water damage exclusions are becoming increasingly prevalent in homeowners’ primary policies across the nation, with some policies excluding all sewage backups, regardless of their origin.
On appeal, the 5th Circuit upheld the district court’s dismissal. Judge Leslie Southwick noted that under Mississippi law, an insurer’s representative can only bind the insurer with statements authorized by the company. The Coopers failed to provide evidence that State Farm had authorized the adjuster to alter the policy terms.
Furthermore, the court pointed out that the Coopers did not demonstrate that the sewage originated from their home’s plumbing system. A letter from the municipal utility denied liability, asserting that a burst pipe on their property caused the backup, which was linked to issues with the home’s sewage grinder pump.
While one plumber agreed that the backup was not due to off-premises issues, another found that a cracked connection in the drainpipe and the absence of a redundancy valve on the grinder pump allowed sewage from the city’s system to backflow into the home. This conflicting evidence created a factual dispute that the Coopers’ attorney, Ed Blackmon Jr., argued should be resolved by a jury.
The appellate judges concluded that while the cause and location of the problem were in dispute, the sewage appeared to originate from off-premises. They noted that the utility’s letter confirmed that the grinder pump’s failure contributed to the backup but did not clarify the source of the sewage.
State Farm’s legal team, led by Amanda Barbour, argued that the plumbers’ opinions were not significantly different and that the adjuster’s comments did not alter the policy. The court also relied on an expert witness for State Farm, who stated that it was impossible for sewer water from on-premises to have flooded the home when no plumbing fixtures were in use.
Judge Andrew Oldham dissented, criticizing State Farm for creating the impression that the adjuster had the authority to approve coverage. He argued that State Farm should be held accountable in front of a jury for misleading the Coopers about their coverage.
The full opinion and dissent can be viewed here.
Related: Appeals Court Weighs in on Brokers’ Duty in Securing Adequate Coverage
Topics
Mississippi
State Farm
