Most commercial and personal lines property insurance policies exclude damage caused directly or indirectly by the peril of “earth movement.” The ISO version of this exclusion appears in many modern policies and provides that:
- [Insurer] will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
b. Earth Movement
(1) Earthquake, including any earth sinking, rising or shifting related to such event.
(2) Landslide, including any earth sinking, rising or shifting related to such event.
(3) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased;
(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.
(See Causes of Loss—Special Form, CP 10 30 10 00, Copyright Insurance Services Office, Inc. 1999)
For more than a decade, courts throughout the country have wrestled with the question of whether the Earth Movement exclusion applies in all circumstances where earth movement plays some part in the chain of events that produced the loss. Most of the reported decisions address the interpretation and application of subparagraph (4) of the exclusion, quoted above. The loss scenarios that typically spawn coverage litigation involve some form of damage to a building’s structure (floor slab, foundations walls, etc.) caused by the movement or depletion of supporting or surrounding soil due to, (i) demolition, blasting or heavy construction activities at neighboring properties; or (ii) water leaking from an underground supply or drainage pipe.
A number of jurisdictions have construed the Earth Movement exclusion narrowly and ruled that it applies only to earth movement associated with “natural” causes (such as an earthquake or landslide), and not to construction or other causes involving human intervention. En route to finding coverage, those courts typically rely on the historical development of the Earth Movement exclusion or resort to the doctrine of “reasonable expectations.” In the other camp lie courts that apply the exclusionary language literally to bar coverage for all property damage associated with earth movement, regardless of what caused the ground to move. Those courts often rely upon the anti-concurrent causation language of the exclusion: “Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”
Continue Reading “Earth Movement” Exclusion Bars Coverage for Damage Traced to Leak from Broken Water Pipe, According to Massachusetts Appeals Court