Appeals Court Weighs ‘Microbe’ Versus ‘Water-borne Material’
By Don R. Sampen, published, Chicago Daily Law Bulletin, December 9, 2025
The 1st District Appellate Court, construing a property insurance policy, recently held that a policy limit applying to “microbes” resulting from a water backup did not foreclose the application of a higher coverage limit for loss caused by “water-borne material.”
The court therefore reversed summary judgment that had been granted to the insurer.
The case is Schaff v. Travelers Home and Marine Insurance Co., 2025 IL App (1st) 240276 (November 21). The insureds, plaintiffs Jeffery and Michele Schaff, were represented by Loftus & Eisenberg Ltd. of Chicago. Foran Glennon Palandech Ponzi & Rudloff P.C. of Chicago represented the insurer, Travelers. Other parties to the appeal had separate counsel.
The plaintiffs, who resided in Lake Forest, experienced a sewage backup in the basement of their home in 2017. They immediately contacted their insurance broker, Hub International Midwest Insurance Ltd., who contacted ServPro of Wheaton/Glen Ellyn to come remediate the home.
The plaintiffs’ insurer, Travelers, also was notified and sent an adjuster to evaluate the loss. During the course of remediation a determination was made that the HVAC system in the home needed to be replaced due to the sewage backup. Travelers ended up paying about $155,000 for the loss, including for damages to the dwelling itself, for replacement of personal property, and for the plaintiffs’ additional living expenses.
At some point, however, the plaintiffs informed Travelers of their belief that the sewage had become “aerosolized,” such that airborne odors, parasites, bacteria, viruses, fungi and mold had entered the home’s ductwork. Travelers expressed skepticism about what had occurred, but said that even if the plaintiffs were correct, the policy limited coverage for such damage to $5,000.
When informing the plaintiffs, Travelers relied on “Additional Coverage 20” in its policy providing coverage for remediation due to “fungi, other microbes or rot” occurring in the home, but imposing a coverage limit of $5,000. The plaintiffs, however, relied on “Additional Coverage 22” for their position that no such limit actually applied.
Additional Coverage 22 covered direct physical loss “caused by water-borne material” entering the home through a backed-up sewer or drain. The limits placed on that coverage, moreover, were subject to the same higher dwelling and personal property limits applicable to the home in general.
The plaintiffs eventually brought suit against Travelers for failure to adequately cover what they regarded as “water-borne material.” The claims against Travelers included its alleged responsibility for deficiencies in ServPro’s work and a Consumer Fraud Act claim. In addition, the plaintiffs asserted claims against Hub and ServPro. In turn, ServPro filed a counterclaim against the plaintiffs for payment for the work it had performed.
On cross-motions for summary judgment and the defendants’ motions to dismiss, the trial court found against the plaintiffs on all claims, except for $5,000 representing the limit under Additional Coverage 20, which the court found may be owing to the plaintiffs. The plaintiffs then took this appeal.
Analysis
In an opinion by Justice Aurelia Pucinski, the 1st District both reversed and affirmed rulings of the trial court. She initially addressed the coverage issue raised by the plaintiffs.
She observed that bacteria in the ductwork constituted microbes, and thus could be subject to the $5,000 limit of Additional Coverage 20. Travelers, however, did not dispute that microbes in sewage could also constitute “water-borne material” that might be covered by Additional Coverage 22, to which no such limit applied.
Pucinski ultimately concluded that the trial court erred insofar as it found that Additional Coverage 20 limited the plaintiffs’ recovery and foreclosed them from seeking coverage under Additional Coverage 22. Rather, she found fact issues regarding whether the plaintiffs may have suffered a direct physical loss from “water-borne material” covered by Additional Coverage 22.
She further wrote that Travelers could have defined the term “water-borne material” to specifically exclude bacteria or other microbes, but it failed to do so. As a result, on remand, the plaintiffs were entitled to adduce expert or other evidence establishing the nature of the loss and possible coverage under Additional Coverage 22. Travelers, for its part, would be entitled to assert other defenses to coverage, such as any alleged failure to mitigate damages.
Pucinski affirmed with respect to the plaintiffs’ other claims against Travelers, finding that Travelers was not responsible for ServPro’s work and that the plaintiffs had not sufficiently alleged a basis for consumer fraud against Travelers. She also affirmed the dismissal of the plaintiffs’ claims against Hub.
As to the trial court’s rulings in favor of ServPro, however, Pucinski found reasons to reverse, based on the adequacy of the plaintiffs’ allegations and possible fact issues regarding who assumed responsibility for the payment of ServPro’s services.
The court therefore affirmed in part and reversed in part.
Key Point
A policy provision limiting the scope of coverage for a loss that may reasonably be read as overlapping with another provision allowing greater coverage for the same loss can give rise to fact issues requiring evidence regarding the nature of the loss.