The Massachusetts Supreme Judicial Court recently considered the interplay between “hidden seepage” coverage, and a “surface water” exclusion, holding that the policy’s enforceable anti-concurrent causation language made all the difference in the court’s conclusion that a loss caused by surface water seeping into a structure was excluded.

In Boazova v. Safety Insurance Company, Docket No. SJC-10908, 2012 Mass. LEXIS 462 (May 29, 2012), in 2001, Plaintiff purchased a home that was built in 1947. While renovating the kitchen, Plaintiff’s contractor discovered severe deterioration of the wooden sill plate that rested on top of the home’s concrete foundation. Plaintiff submitted a claim to her homeowners’ insurer for the costs associated with repairing the damage.

The insurer denied coverage, concluding that the damage was caused by a combination of surface water, deterioration, settling and improper construction of the concrete patio. Both Plaintiff and the insurer retained engineering experts, who essentially agreed that the damage was caused by the repeated seepage or leakage of water from the concrete patio down to the foundation, and that such damage had been hidden from Plaintiff’s view until she started the kitchen renovations.

With regard to continuous seepage of water, the policy provided “We insure against risk of direct loss to property . . . only if that loss is physical loss to property. We do not insure, however, for loss . . . [c]aused by . . . [c]onstant or repeated seepage or leakage of water . . . unless such seepage or leakage of water . . . is unknown to all insureds and is hidden . . . .

. . . any ensuing loss to property . . .not excluded or excepted in this policy is covered.”

With regard to surface water, the policy provided “We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss . . . Water Damage, meaning. . . surface water . . . .”

Safety denied the claim based on this exclusion and the anti-concurrent language therein.

Plaintiff filed suit, alleging the insurer improperly denied coverage. The trial court considered cross-motions for summary judgment. The court denied Plaintiff’s motion, finding that the Plaintiff was not entitled to coverage for hidden seepage or leakage of water, both covered perils, because she could not meet her burden of proving that the damage occurred within the policy period. The court then granted the insurer’s motion, finding that the insurer had met its burden of proving that the “surface water” exclusion precluded coverage for the loss.

A divided panel of the Massachusetts Appeals Court affirmed the entry of summary judgment in the insurer’s favor, and the Supreme Judicial Court granted further appellate review. In affirming the decision, the Supreme Judicial Court held as follows:

  • Plaintiff had sustained her initial burden of proving that her claimed loss, i.e., the deterioration and rotting of the wooden sill plate, adjoining floor joists and wall studs, fell within the “hidden seepage” coverage in the homeowners policy because it was undisputed the seepage of water occurred and that it was undetectable by the Plaintiff.
  • Nonetheless, the insurer met its burden of proving that the “surface water” exclusion precluded coverage for the Plaintiff’s loss because, taking into account the anti-concurrent causation language prefacing the exclusion, the Plaintiff’s loss was caused, directly or indirectly, by the accumulation and flow of water along the patio, migrating towards the unprotected area between the patio and the home’s foundation. Under the anti-concurrent causation clause, the damage would not be covered regardless of any other cause or event that contributed concurrently or in any sequence to the loss.
  • The fact that water migrated from the patio into the home’s foundation did not change the character of the surface water.
  • Had the seeping water originally come from within the Plaintiff’s home, i.e., by way of broken pipe, etc., it would not have been “surface water” and thus, the damage would not have been excluded from coverage.

The anti-concurrent causation language was therefore dispositive. While Massachusetts and the vast majority of jurisdictions have held that anti-concurrent causation language does not violate public policy, a few jurisdictions have held the clauses unenforceable. Therefore, when dealing with a claim that potentially implicates an anti-concurrent causation clause, it is always important to consult with counsel and research the law of the applicable jurisdiction.