Precious Metals Exclusion Precluded Coverage, Fifth Circuit Affirms

September 21, 2016 | Insurance Coverage

The U.S. Court of Appeals for the Fifth Circuit has ruled that the precious metals exclusion in an all-risk commercial property insurance policy precluded coverage for the insured’s claim that thieves had stolen its air conditioning units’ condensers.

The Case

Celebration Church, Inc., discovered that thieves had opened seven air conditioning units installed on the rooftop of its commercial property in Metairie, Louisiana, and had stolen the units’ condensers, resulting in the loss of condenser coils and refrigerant.

Celebration Church filed a claim with United National Insurance Company (“UNIC”) under its all-risk commercial property insurance policy. UNIC denied coverage on the basis that the theft fell under the policy’s precious metals exclusion.

Celebration Church sued UNIC, which moved for summary judgment. The U.S. District Court for the Eastern District of Louisiana ruled in favor of UNIC, and Celebration Church appealed to the Fifth Circuit.

The Fifth Circuit’s Decision

The circuit court affirmed, finding that the policy’s precious metals exclusion “unambiguously” applied to preclude coverage.

In its decision, the Fifth Circuit explained that the policy excluded coverage for loss or damages “caused by or resulting from” the “theft … of … copper [or] aluminum” coils from “machinery or equipment attached or connected to buildings or structures” – which, the circuit court said, included rooftop air conditioning units.

Moreover, the circuit court continued, numerous witnesses had testified that the coils were either copper or aluminum, both of which were explicitly listed in the exclusion. Given Celebration Church’s failure to produce any evidence suggesting that the condenser coils had been made of anything other than copper or aluminum, the circuit court concluded, the district court had not erred in deciding that there was no genuine dispute of material fact as to the composition of the coils and that, as a result, the precious metals exclusion applied.

The case is Celebration Church, Inc. v. United National Ins. Co., No. 16-30048 (5th Cir. Aug. 30, 2016).

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  • Robert Tugander

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