After a windstorm caused damage to the insured’s building and repair materials, the court sided with the insured in determining the amount of the deductible. Semaho, Inc. v. AMCO Ins. Co., 2025 U.S. Dist. LEXIS 193521 (D. Colo. Sept. 30, 2025).

Semaho owned two commercial buildings insured under a policy issued by AMCO. The buildings were damaged in a windstorm and Semaho’s contractor stored the building materials for the repairs on one building’s roof.

A second windstorm then seriously damaged the building materials stored on the roof. Semaho submitted a claim for the lost building materials. Coverage was undisputed but the parties disagreed over which deductible should apply to Semaho’s claim. The key policy provision stated that the deductible should be calculated separately for the “building” and for certain categories of “personal property,” based on “the value(s) of the property that has sustained loss or damage.”

Semaho contended that the building materials were “personal property’ within the plain meaning of the term, so the deductible should be calculated based on the value of the lost building materials. AMCO countered that the building materials were only covered pursuant to the coverage on the building, so the building was the property that sustained the loss, and the deductible should be calculated using the value of the building. The two buildings each had a value of of $22 million for Buiding Coverage under the policy. Because AMCO contended that the applicable deductible was $440,000, and that the value of the lost building materials did not exceed the deductible, AMCO did not issue any payments on Semaho’s claim for the lost materials.

Semaho sued for breach of contract and bad faith. Both parties moved for summary judgment, asking the court to adopt their interpretation of the policy provisions relevant to calculating the deductible. AMCO also moved for summary judgment on the bad faith claim.

The parties agreed that the deductible percentage was 2%, but disagreed over whether the 2% applied to the value of the building or to the lost materials. The Windstorm or Hail Deductible provided that “[a] Deductible is calculated separately for, and applies separately to: . . . each building if two or more buildings sustain loss or damage; . . . [or] Personal property in the open.” AMCO argued that the lost materials were part of the “building,” so the deductible should be 2% of the value of the Building Coverage. Semaho argued that the lost materials were “[p]ersonal property in the open,” so the deductible should be 2% of the value of the materials.

The court found AMCO’s interpretation appealing. When the Endorsement explained that the deductible should be calculated using the “value(s) of the property that has sustained loss or damage,” the relevant “property” was the entire “building” as defined in the Coverage Property Provision. The lost building materials were only Covered Property because the Covered Property Provision treated them as part of the coverage on the “building,” so they could not be treated as separate “personal property” entitled to their own deductible under the Endorsement.

But it was not clear to the court that the Covered Property Provision should be understood to define “building” for the Endorsement and the rest of the policy. Accepting the Covered Property Provision as a policy-wide defintion of the word “building’ would mean interpreting “building” to include various forms of personal property, such as building materials. This interpretation defied the plain meaing of the word “building.” The Endorsement itself did not indicate that its use of the words “building” and “personal property” should be interpreted according to anything other than their plain meaning.

The Endorsement could be reasonably read either way: the “property that has sustained the loss” could be the “building” or “personal property” within those terms’ ordinary meaning, or it could be “building” as described in the Covered Property Provision, such that the building was always the property that sustained the loss when an insured submitted a claim under the Building coverage.

Therefore, the policy was susceptible to more than one reasonable interpretation and ambiguous. The ambiguities in the policy were construed against AMCO and in favor of coverage. The Endorsement’s Windstorm or Hail Deductible was to be calculated as 2% of the value of the lost building materials. Semaho’s cross-motion was granted.

Because AMCO’s interpretation of the relevant policy provisions was reasonable, AMCO’s motion was granted in part dismissing the bad faith claim.