WOOD DESTROYING INSECT EXCLUSIONS PRECLUDE COVERAGE – CERTIFICATE OF INSURANCE HAS NO IMPACT

The Dallas Court of Appeals on Wednesday affirmed the summary judgment in favor of the insurer based on the wood destroying insect inspection exclusions in the policy.  In Simon v. Tudor Ins. Co., No. 05-12-00443-CV, 2014 WL 473239 (Tex. App. – Dallas Feb. 5, 2014), the insured performed wood destroying insect (“WDI”) inspections as part of the business of structural pest control.

In December 2007, the insurer issued a commercial liability policy to the insured with a WDI exclusion contained in two separate endorsements.  The renewal policy in 2008 also contained these endorsements.  Further, all the relevant applications of insurance signed by the insurer and provided to the insurance agent, Hines, stated that WDI was excluded.  During the renewal process in November 2008, Hines, as the insurer’s authorized representative, signed a certificate of insurance for insured that was submitted to the Structural Pest Control Service of the Texas Department of Agriculture.  The certificate failed to list any excluded categories of pest control work excluded from coverage.

The insured performed a WDI inspection report for a homeowner, who subsequently sued the insured for performing an improper WDI inspection.  The insured reported the claim, which was denied by the insurer on the grounds that the policy excluded coverage for that type of claim.  The trial court agreed with the insurer and granted summary judgment in its favor.

The insured’s sole argument on appeal is that the trial court erred in concluding that it could not have reasonably relied on the representations made by the insurer and its agent in the certificate of insurance submitted to the Department of Agriculture, which did not identify any exclusions to coverage.  The Court stated that the evidence established that the insured expressly acknowledged in all applications of insurance that the insurance for which the insured applied did not include coverage for liability arising from WDI inspections.  The Court further stated that the plain language of both the original and renewal policies clearly exclude coverage for such inspection services in the applicable endorsements.  Therefore, the insured could not have reasonably relied on the language in the insurance certificates.

The Court also noted that the certificates of insurance specifically stated (1) that the certificate neither affirmatively nor negatively amends, extends or alters the coverage afforded by the polices scheduled herein; and (2) that the certificate is furnished for information only, confers no rights on the holder and is issued with the understanding that the rights and liabilities of the parties will be governed by the original policies as they may be lawfully amended from time to time.  Accordingly, summary judgment in favor of the insurer was affirmed.