Oregon's Court Of Appeals Overturns A Jury Verdict Finding Broad Coverage Under An Oral Binder
In Stuart v. Pittman, A134858 (Or. Ct. App. May 5, 2010), the insured convinced a jury that it deserved coverage for extensive snow, ice and water damage to a home under construction. The insured’s policy clearly excluded the loss, but the insured successfully argued that coverage should be provided under an oral binder that preceded the policy. The insured’s reasoning was that when he had asked for “course of construction” coverage “although he did not know specifically what that was,” the insurer’s agent had told him that the policy would cover “anything that goes through the cracks … anything for which I might be deemed liable … and anything that the contractor’s coverage did not specify or provide benefit for.” Because the insurer failed to provide a copy of the policy (with its relevant exclusions) until after the damage had occurred, the insured argue that coverage should be provided consistent with the agent’s representations.
The Court of Appeals reversed, holding that the evidence was “simply to vague and obscure to satisfy the requirement of ORS 742.043(1)” that, in the context of oral binders, any exception to standard coverage must be “clear and express.” Because the insured’s own expert testified that standard “course of construction” policies would not have covered the loss, the burden was on the insured to prove that the standard terms had clearly and expressly been broadened for purposes of the oral binder. Viewing the evidence (which consisted almost exclusively of the insured’s own testimony about what had been represented to him) in the light most favorable to the insured, the Court of Appeals nevertheless found “that there is no evidence that the parties agreed to or that [the agent] bound terms that clearly and expressly waived or superseded the usual terms or exclusions of course of construction coverage.”
