Holcomb Dunbar - North Mississippi Attorneys

Who has the Burden of Proof on An Insurance Policy Exclusion

Insurance PolicyInteresting new Mississippi Supreme Court case regarding homeowners insurance and the proof required to get to trial.  Hoover v. USAA.  The majority opinion seems to be holding that, because the defendant had the burden of proof on a defense, the trial court erred in granting a defense directed verdict even though the only evidence supported the defense.

 The case is a wind/water Katrina case.  The homeowners said it was wind, but could provide no proof of that.  USAA put on expert proof of water being the cause of much of it and requested the trial court grant a directed verdict as to those claims, since the homeowners provided no proof to rebut that evidence and thus there was no triable issue as to those damages.  The trial court granted.  However, the Mississippi Supreme Court reversed, in a 6-2 opinion, and held that since the USAA policy was an “all risk” policy and accordingly bears the burden of proof on policy exclusions (i.e. the water/flood exclusion),  the homeowners did not have to rebut such evidence.  Causation in such a situation was an issue for the jury to resolve even without contradictory proof. 

 Although they did not come right out and say it, the Court seemed to hold that:  when an insured first satisfies the criteria of the insuring agreement in the policy, they have made out a valid claim, and even when there is uncontroverted proof of the applicability of exclusion, it is for the jury to decide the ultimate question of coverage.  In other words, the Court seems to say that virtually every exclusion defense in an all-risk or all-peril policy has to go to a jury.

USAA is seeking a rehearing on this, so it is still being considered.  Will be interesting to see if this is their final pronouncement and if someone tries to apply this reasoning to other types of policies.

To read the full opinion, click here.

-Brad Best

2018