In Privilege Underwriters Reciprocal Exchange v. Jeff Mankoff and Staci Mankoff, the Supreme Court of Texas held that an insurance policy deductible applicable to covered losses caused by “Windstorm or Hail”—terms that the policy did not define—does, in fact, unambiguously apply to damage caused by a tornado.
In 2019, a tornado followed by approximately two minutes of wind-driven rain damaged the home of the insureds. Consequently, they submitted a claim for damages to their insurer. According to the insurer, the tornado qualified as a windstorm, making the insureds’ claim subject to the policy’s “Windstorm or Hail Deductible,” which provided in relevant part: “In the event of direct physical loss to property covered under this policy caused directly or indirectly by windstorm or hail, the Windstorm or Hail deductible listed on your Declarations is the amount of the covered loss for dwelling, other structures and contents that you will pay.” However, “windstorm” was not defined in the policy.
Thus ensued a fight over the definition of “windstorm:” the insureds argued that “windstorm” is a peril distinct from a tornado, while the insurer argued that “windstorm” is a broad term meant to encompass tornadoes. The trial court granted the insurer’s motion for summary judgment on the same grounds and rendered a take-nothing judgment against the insureds. The Dallas Court of Appeals reversed, rendering judgment for the insureds due to its conclusion that “the ‘Windstorm and Hail Deductible’ is ambiguous because the term ‘windstorm’ is undefined and subject to more than one reasonable meaning.” Mankoff v. Privilege Underwriters Reciprocal Exch., 708 S.W.3d 706, 708 (Tex. App.—Dallas 2024). In so finding, the court of appeals was persuaded by the insureds’ argument that dictionary definitions, media coverage, and various statutory provisions indicate that “windstorm” could mean “a storm with damaging winds that may or may not be accompanied by precipitation, but [which] does not include a tornado” and rejected the insurer’s arguments that various dictionary definitions of the term, as well as a definition approved by a 1946 court of appeals decision, necessarily encompass a tornado. Id. at 711, 713–14.
The Supreme Court of Texas began its analysis by reviewing foundational principles of insurance policy interpretation, namely: (a) insurance policies are controlled by rules of general contract interpretation and construction; (b) whether a contract is ambiguous is a question of law that, in contract law, denotes that if the language is subject to two or more reasonable interpretations, it is ambiguous; (c) should the court determine that a policy’s language is ambiguous, the court must adopt the language that most favors the insured; and (d) when an insurance policy does not define a term—as here, “windstorm”—the court must give the language its plain, ordinary meaning unless something else in the policy shows the parties intended a different, technical meaning.
Here, the Court determined that “windstorm” should be given its plain, ordinary meaning. Thus, in reviewing dictionary definitions of the word, the Court found a common thread: Merriam-Webster, the American Heritage Dictionary, Webster’s New World College Dictionary, and the Collins English Dictionary all offer variations of “a storm with high winds and little to no precipitation.” The insurer focused on the first half of the definition, noting that a tornado is a storm with high winds, while the insureds focused on the latter half of the definition, noting that the language regarding precipitation serves to exclude tornadoes because tornadoes are precipitation events, including the one that damaged their home.
The Court rejected the insureds’ interpretation and explained that tornadoes clearly fall within the definitional boundaries of “windstorm,” as tornadoes are violent and destructive movements of wind. As far as the precipitation element, the Court concluded that, while a weather event may not qualify as a windstorm depending on the amount of precipitation involved, that has no effect on the fact that, based on the ordinary meaning of the terms, a tornado is always a windstorm.
As far as prior statutory interpretation, the Court was not convinced that either the Insurance Code or the Property Code intended to define “windstorm” to exclude “tornadoes.” While various sections of the statute list tornadoes and windstorms separately, the Court concluded that the provisions included broad, enumerated terms with ordinary meanings that encompass narrower terms. See, e.g., Tex. Ins. Code § 252.003 (including terms such as “rain,” “tornado,” and “lightning” in a list that also includes “weather or climatic conditions”). The Court did not find a narrowing modifier in any of the provisions to indicate that the Legislature understood “windstorm” to be exclusionary of “tornado.”
The Court acknowledged that, while there are no prior decisions that specifically address the ordinary meaning of “windstorm,” the insurer’s cited case defined “windstorm” in the jury charge as “more than an ordinary gust of wind, however prolonged … [that] may or may not have the whirling features of a cyclone or tornado,” necessarily concluding that a tornado qualifies as a windstorm and providing guidance to this Court and other prior courts throughout the state. Fireman’s Insurance Co. v. Weatherman, 193 S.W.2d 247, 248–49 (Tex. App.—Eastland 1946, writ ref’d n.r.e.).
The insureds’ sources were not convincing. First, the Court rejected the cited media excerpts, as none of the excerpts differed from the common definition (a storm with violent, strong winds but little or no precipitation) or offered any definitional distinction between windstorms and tornadoes. Second, the Encyclopedia Britannica’s definition (“a wind that is strong enough to cause at least light damage to trees and buildings and may or may not be accompanied by precipitation”) did not differ from the common definition, and, though it explained that tornadoes and tropical cyclones “are usually classified separately,” this separation still did not carve out tornadoes as meteorological events distinct from windstorms. Finally, the insureds’ expert meteorologist was of little help, largely relying on the American Meteorological Society’s Glossary of Terms, which defined windstorm in much the same way as the common definition.
Thus, the Court concluded that while not all windstorms are tornadoes, all tornadoes are windstorms, regardless of whether the broader weather event includes precipitation. Accordingly, the common, ordinary meaning of “windstorm” in an insurance policy unambiguously includes tornadoes, such that the insureds’ claim was in fact subject to the policy’s “Windstorm or Hail” deductible.
The Court’s decision in Privilege Underwriters Reciprocal Exchange v. Jeff Mankoff and Staci Mankoff reinforces the importance of basic contract and insurance policy interpretation principles, especially in relation to undefined terms. Ambiguity does not arise because of a “simple lack of clarity,” or because the parties proffer different interpretations of the contract. DeWitt Cnty. Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999). An ambiguity arises only after the application of established rules of construction leaves an agreement susceptible to more than one meaning, and both are reasonable. Id. Further, this case is especially instructive to homeowners and insurance companies purchasing and issuing policies in the state of Texas given Texas’s average of 137 tornadoes each year, the highest number of any state in the U.S.[1]
[1] “Spring Weather Safety Campaign – Tornadoes”. Houston/Galveston National Weather Service. Retrieved May 14, 2024.