Allstate’s Denial of Water Leak Claim Reasonable, Court Rules


PHILADELPHIA, May 5  — A Pennsylvania federal judge on May 5 granted judgment in favor of an insurer in a water damage suit after determining that the company’s reliance on a maintenance exclusion to deny the claim was reasonable.

David Dougherty filed sued Allstate in state court for breach of contract and bad faith.   The suit was removed the U.S. District Court for the Eastern District of Pennsylvania on diversity jurisdiction grounds. Allstate denied Dougherty’s homeowner’s  water damage claim, contending that coverage was barred by the policy’s occupancy/heat exclusion and the planning, construction or maintenance exclusion.

The home was vacant and unoccupied at the time of the water loss, which occurred in winter weather.

Following cross motions for summary judgment Judge Thomas N. O’Neill Jr.held  Allstate met its burden in proving that it properly applied the policy’s maintenance exclusion in denying coverage. He held that the evidence presented

“supports a conclusion that the incident was caused by a failure to maintain the furnace at the property…On the record before me, viewed in the light most favorable to plaintiff, I find that a reasonable jury could not conclude that Allstate breached its obligation to plaintiff in applying the maintenance exclusion to bar plaintiff’s claim.”

Allstate’s summary judgment motion was also granted as to the bad faith claim.  The Judge held:

“It was not unreasonable for Allstate to focus its claim investigation on the condition of plaintiff’s furnace given that the water damage to the property occurred in January in Pennsylvania in an unoccupied property where the gauge on the oil tank read empty at the time of the loss (even though the gauge was later determined to be faulty.”

Dougherty v. Allstate Property And Casualty Insurance Company, (E.D. Pa. May 5, 2016, O’Neill, J.)


Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at or 717-731-4800.

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