CHAPTER THREE - PERSONAL PROPERTY
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured:
Note the requirement of a “direct physical loss to property” in the following situations:
Insureds could not recover under all-risk Homeowners policy for alleged failure of their artesian well to produce a sufficient quantity of potable water after many years of use. Insureds failed to carry their burden of demonstrating a fortuitous event causing the claimed loss, separate from the nature and inherent qualities of the well itself. 33
The insurer denied coverage on the basis that a windstorm was too remote. The court stated that the windstorm could have been the direct cause of loss when the windstorm blew open a roof door and subzero air entered the building, causing a pipe to freeze and burst and resulting in water damage. Therefore, the denial was that the storm was too remote was therefore improper. 34
FIRE AND LIGHTNING
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.
1. Fire or lightning.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured:
1. Fire or lightning.
Generally losses resulting from fire or lightning are covered – the entire personal residence coverage stemmed from the original fire insurance policy on homes. However, ever so often a court decision will cause one to pause and ask, “Huh?”
Reasonable Expectations of the insured: In a 1984 judgement, a court ruled that the “Homeowners policy language providing coverage for ‘direct loss... caused by (1) fire. . .’ was ambiguous and should be interpreted in accordance with the reasonable expectations of the insured.” Think about it…
WINDSTORM OR HAIL
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
2. Windstorm or hail.
This peril does not include loss to the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.
This peril includes loss to watercraft and their trailers, furnishing, equipment, and outboard motors, only while inside a fully enclosed building.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
2. Windstorm or hail.
This peril does not include loss to property contained in a building caused by rain, snow, sleet, sand or dust. This limitation does not apply when the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening. This peril includes loss to watercraft of all types and their trailers, furnishings, equipment, and outboard motors, only while inside a fully enclosed building.
WINDSTORM, DEFINED
FAbsent a contractual definition, "windstorm" refers to a wind "of sufficient violence to be capable of damaging the insured property, either by its own action or by projecting another object against it."
A little more specific definition provided by an Ohio court:
FUnder a policy providing insurance against all direct loss to property caused by windstorm but containing no definition of the term, a "windstorm" was designated to be wind of sufficient strength to be capable of damaging the insured's property by its own force, provided that the property was in a reasonable state of repair when the storm occurred.
A warehouse owned by an insured suffered a loss when it collapsed during a windstorm. Evidence showed that the structure of warehouse was deteriorating prior to collapse. Coverage was excluded on the basis that the evidence failed to establish that collapse was caused by wind. Windstorm was not of a tumultuous character to cover loss, especially since other buildings surrounding warehouse were undamaged by wind. To be within windstorm coverage, wind must be of unusual violence and be the dominant and efficient cause of damage, though there may be other contributing causes. 35
DAMAGE TO BUILDING REQUIRED
In considering issue of coverage under a Homeowners policy, the court held that rain damage to contents occurring while insureds were re-roofing the dwelling and had removed the existing shingles was not covered under windstorm or hail coverage of policy. The policy restricted coverage to instances where wind or hail had caused opening in roof, and rain did not constitute a "falling object" under endorsement coverage of policy. 36
Roof damage: In another situation, the insurer was liable for exterior and interior damage where roof was damaged by wind but wind did not actually blow holes through the roof.
Water accumulating in the basement: When insureds attempted to recover under a Homeowners policy for damage caused by accumulation of water in their basement, recovery was denied for damages. The insureds failed to establish that the loss was the result of a Peril Insured Against as there was no evidence the water damage was caused by the direct force of the wind creating an opening in the roof or wall of the house and had instead been caused by seepage from a broken gutter.
CAUSATION QUESTIONS
Roof collapse from snow: A policy which insured against a loss caused by windstorm but excluding loss caused directly or indirectly by snow or sleet, whether or not driven by wind, was determined not to be ambiguous. The policy afforded no coverage for roof collapse resulting from significant snow accumulation.
HAIL
When the insured took out a Homeowners insurance application, the agent stated in the agent’s report, that the was roof was “in good condition.” After suffering roof damage after a wind and hailstorm, the insured made a claim which was denied because they’re postclaim inspection reports shown that the damage to the roof was the result of normal wear and tear.
The insured sued the insurer, stating that the insurer acted maliciously and with reckless disregard for the insureds’ rights when they denied the claim. The court ruled that the insurer did not act maliciously or with reckless disregard for insureds' rights, and ruled in favor of the insurer.
EXPLOSION
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
3. Explosion.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ..
3. Explosion.
Water pipe “explosion”: While most people think that they know what is an explosion, and what is not, a 1990 court case ruled that damage to vacant rental property caused by flooding from burst water pipes that froze because of termination of electrical service - constituted "explosion" and was a peril insured against under extended perils coverage in policy.
RIOT OR CIVIL COMMOTION
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
4. Riot or civil commotion.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: . . .
4. Riot or civil commotion.
Riot: One might imagine that it would be difficult to determine exactly what is a “riot.” An Illinois court defined it as succinctly as anyone: “To constitute a riot under a property insurance policy there must be ‘three or more persons tumultuously assembled with the intent to mutually assist one another against all who shall oppose them in the doing either of an unlawful act of a private nature or of a lawful act in a violent or tumultuous manner.’"
Perhaps another definition is more easily understandable (note the use of “tumultuous” in both):
F A riot is a tumultuous disturbance of the peace by a group of sufficient number, greater than or equal to three, to constitute a mob in the lay sense of the word and that operates to the terror of the people.
AIRCRAFT
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
5. Aircraft, including self-propelled missiles and spacecraft.
Other Company.
COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
5. Aircraft, including self-propelled missiles and spacecraft.
The differences between these models is slight. If parts from the Russian Space Station had rained down on your property, the Homeowners policy would have covered the damage. Now you can rest tonight.
VEHICLES
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
6. Vehicles.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
6. Vehicles.
Where Homeowners policy covered peril of "vehicles," policy was applicable to damaged personal property caused by heating oil that was spilled during delivery, leaked into basement, and permeated the residence, causing damage to personal property. Court held that damage was the direct and immediate result of the unloading of the oil from the delivery truck and spillage of the oil during delivery. Policy did not define "vehicles" and therefore court gave broad interpretation. 38
If, at first blush, the ruling (above) is difficult to understand, study the wording of the policy provision listed above the Consumer Application, and see if the reasoning behind the decision doesn’t appear.
Definition of Vehicle: When is a vehicle, a “vehicle” under the policy? This question is not easily answered frequently, and in one court case, the plaintiff sought recovery for loss of personal property when a fishing boat on which he was a passenger capsized. The court held that the loss was caused by a boat but that the policy was ambiguous as to the meaning of "vehicles" and remanded the case to the trial court to determine whether a boat was a "vehicle" under the language of the policy. The decision of the trial court is now shown as it obviously was settled out of court, but one cannot wonder if the court would have considered a boat as a vehicle.
SMOKE
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
7. Smoke, meaning sudden and accidental damage from smoke.
This peril does not include loss caused by smoke from agricultural smudging or industrial operations.
Other Company.
COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
7. Smoke, meaning sudden and accidental damage from smoke.
This peril does not include loss caused by smoke from agricultural smudging or industrial operations.
An insurer moved for summary judgment after an insured brought an action against the insurer to recover for damages caused by waterproofing sealant fumes migrating into the interior of the insured's home. The district court granted the summary judgment motion for the insurer, finding that the "pollution" exclusion barred coverage for damage to the home and that the personal property coverage for damage from smoke did not apply. 135
VANDALISM OR MALICIOUS MISCHIEF
ISO COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
8. Vandalism or malicious mischief.
Other Company.
COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
8. Vandalism or malicious mischief, meaning only willful and malicious damage to or destruction of property.
Vandalism: The definition of "vandalism," is, in part, as "willful and malicious damage to, or destruction of, the described property." An insured would be entitled to recover only for that property either destroyed or damaged, but not for property merely removed (theft) from the premises.
Vandals turned on an outside water spigot which ran for two days, causing water to enter the basement through the foundation walls. Since policy insured vandalism or malicious mischief, the water exclusion did not apply.
The court held vandalism was the proximate cause of the loss. 39
Damage caused by a wild animal: Damage to personal property within a dwelling, when caused by a wild animal, does not constitute vandalism and malicious mischief because a wild animal cannot develop an intent or malice as those terms are used to define vandalism in some policies.
THEFT
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft, including attempted theft and loss of property from a known place when it is likely that the property has been stolen.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
9. Theft, including attempted theft and loss of property from a known location when it is probable that the property has been stolen.
This peril does not include:
a. loss of a precious or semi-precious stone from its setting;
Term "theft" in a policy of Homeowners insurance includes the element of felonious intent. The actions of contractor who seized seven items of personal property of the insured as collateral pending payment for work performed at the insured premises, did not constitute theft, since contractor did not intend to permanently deprive the insured of the property. 40
THEFT
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft ... This peril does not include loss caused by theft:
a. committed by an insured;
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
9. Theft ... This peril does not include ...
b. loss caused by theft:
(1) committed by an insured or by any other person regularly residing on the insured location. Property of a student who is an insured is covered while located at a residence away from home, if the theft is committed by a person who is not an insured;
The Homeowners policy described the insured premises as including any appurtenant structures. The theft coverage excluded loss caused by a tenant of the described premises. Thus a theft from the insured premises by one of the insured's tenants who lived in a coach house in back of the insured home was excluded from coverage. 41
Theft by live-in girlfriend: Exclusion for theft "committed by any person regularly residing" on the insured premises applied to preclude coverage for items allegedly taken by live-in girlfriend, where the girlfriend's occupancy was regular and where she had resided in home for nearly nine years.
THEFT (CONTINUED)
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft ... This peril does not include loss caused by theft: ...
b. in or to a dwelling under construction, or of materials and supplies for use in the construction until the dwelling is finished and occupied;
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
9. Theft ... This peril does not include: ...
(b) loss caused by theft: ...
(2) in or to a dwelling under construction or of materials and supplies for use in the construction until the dwelling is completed and occupied;
Theft from a uncompleted or unoccupied building: The general theft exclusion in the Homeowners policy stating that the policy does not apply to loss "in or to a dwelling under construction or of materials or supplies therefor until completed and occupied" did not prevent an insured from recovering under Homeowners policy when the insured was moving his principal residence and had moved a portion of his household goods when a theft occurred at the new residence. Thus the general theft exclusions did not apply to the automatic removal clause.
Tools used in construction: In a Homeowners policy that excluded theft for a dwelling under construction or of "materials ... for use in construction," tools located in a storage shed on a construction site were not "materials and supplies for use in construction." Practically speaking, the tools used in the construction would have been covered under the Contractors Equipment (or similar Inland Marine) policy if they belonged to the contractor.
In considering issue of coverage under Homeowners policy, the court held that the insured's dwelling was sufficiently completed and occupied to qualify for the theft coverage under the policy, where the insured was building the house as an owner-contractor. At the time of loss the insured was occupying the premises; the exterior, windows, doors, electrical, plumbing, appliances, and air conditioning were completed; and substantial furnishings and personal effects were in the premises. The lack of final governmental inspection did not render the house uncompleted. 42
THEFT (CONTINUED 2)
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft ... This peril does not include loss caused by theft: ...
c. from that part of a residence premises rented by an insured to other than an insured.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ... 9. Theft ... This peril does not include: ...
(b) loss caused by theft: ...
(3) from the part of a residence premises rented to others:
(a) caused by a tenant, members of the tenant's household, or the tenant's employees;
(b) of money, bank notes, bullion, gold, goldware, silver, silverware, pewterware, platinum, coins and medals;
(c) of securities, checks, cashier's checks, traveler's checks, money orders and other negotiable instruments, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, passports, tickets and stamps; or
(d) of jewelry, watches, fur garments and garments trimmed with fur, precious and semiprecious stones;
Part of residence rented to other than insured: Language of policy exclusion for theft loss for "that part of the residence premises rented by an insured to other than an insured" was unambiguous in excluding from coverage property stolen when the entire premises was rented.
THEFT (CONTINUED III)
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in the Section I-Losses Not Insured....
9. Theft ... This peril does not include: ...
c. loss caused by theft that occurs away from the residence premises of:
(1) property while at any other residence owned, rented to, or occupied by an insured, except while an insured is temporarily residing there. Property of a student who is an insured is covered while at a residence away from home;
Rental property owned by the named insureds, which included a dwelling house in which the named insureds had never lived, was not a "residence" for purposes of the theft exclusion. The court held the term "residence" in the exclusion was partially encompassed in the term "residence premises," which was defined as being a dwelling where the insured resided. The exclusion was ambiguous and susceptible to the interpretation that "residence" applied to a structure or facility actually used by the insureds as their dwelling or as one of their dwellings. 43
THEFT (CONTINUED IV)
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft ... This peril does not include loss caused by theft that occurs off the residence premises of: ...
b. watercraft, including their furnishings, equipment and outboard motors;
Other Company.
COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
9. Theft ... This peril does not include: ...
c. loss caused by theft that occurs away from the residence of: ...
(2) watercraft of all types, including their furnishings, equipment and outboard motors; ...
If the residence premises is a newly acquired principal residence, property in the immediate past principal residence shall not be considered property away from the residence premises for the first 30 days after the inception of this policy.
Occasional commercial use of boat: The occasional use of the boat for commercial purposes did not exclude coverage for a theft of the boat that occurred while the boat was being used for private pleasure purposes.
Boat theft from location away from home: Homeowners policy specifically excluding loss of "watercraft, their furnishings, equipment and outboard motors" and "trailers" away from the described premises was clear and unambiguous, and theft of the insured's boat, motor, and trailer from a camp located 40 miles from the residence was not covered.
Boat at home of relative: The insured could not recover for theft of outboard motor from boat kept at home of relative. Nor could the insured recover for theft of rods, reels, and ice chest stolen from boat.
Personal property on a boat: Even though boats and outboard motors, etc., may be excluded by a policy, personal property located on a watercraft can be covered under certain circumstances.
THEFT - TRAILERS AND CAMPERS
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
9. Theft ... This peril does not include loss caused by theft that occurs off the residence premises of: ...
c. trailers and campers.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
9. Theft ... This peril does not include: ...
c. loss caused by theft that occurs away from the residence premises of: ...
(3) trailers and campers designed to be pulled by or carried on a vehicle. If the residence premises is a newly acquired principal residence, property in the immediate past principal residence shall not be considered property away from the residence premises for the first 30 days after the inception of this policy.
GLASS COVERAGE
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
16. Damage by glass or safety glazing material which is part of a building, storm door or storm window.
This peril does not include loss on the residence premises if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ... 16. Breakage of glass, meaning damage to personal property caused by breakage of
glass which is a part of a building on the residence premises. There is no coverage for loss or damage to the glass.
FALLING OBJECTS
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
10. Falling objects.
This peril does not include loss to property contained in a building unless the roof or an outside wall of the building is first damaged by a falling object. Damage to the falling object itself is not included.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
10. Falling objects. This peril does not include loss to property contained in a building unless the roof or an exterior wall of the building is first damaged by a falling object. Damage to the falling object itself is not included.
Rain as falling object: Rain is not considered as “falling objects” for the purpose of Homeowners insurance. Rain damage to contents occurring while insureds were re-roofing their dwelling and had removed the existing shingles - was not covered under windstorm or hail coverage of policy, where the policy restricted coverage to instances where wind or hail had caused opening in roof, and that rain did not constitute a "falling object" under endorsement coverage of policy.
ICE, SNOW, SLEET
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
11. Weight of ice, snow or sleet which causes damage to property contained in a building.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ..
11. Weight of ice, snow or sleet, which causes damage to property contained in a building.
Sump pump failure because of power failure: A severe ice storm caused a power failure, which in turn caused the failure of insureds' sump pump. The insureds sustained personal property damage arising from the failure of the sump pump. The court held that the loss was not covered under the Homeowners policy provision covering losses caused by weight of ice; instead, the insureds' claim fell squarely in the exclusion for damage caused by sump pump failure. 44
COLLAPSE
ISO. ADDITIONAL COVERAGES
8. Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
a. Perils Insured Against in Coverage C-Personal Property. These perils apply to covered building and personal property for loss insured by this additional coverage;
b. hidden decay;
c. hidden insect or vermin damage;
d. weight of contents, equipment, animals or people;
e. weight of rain which collects on a roof; or
f. use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included under items b, c, d, e, and f unless the loss is a direct result of the collapse of a building.
Collapse does not include settling, cracking, shrinking, bulging or expansion. This coverage does not increase the limit of liability applying to the damaged covered property.
Other Company. ADDITIONAL COVERAGES
12. Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
a. perils described in Section I-Losses Insured, Coverage B-Personal Property. These perils apply to covered building and personal property for loss insured by this additional coverage;
b. hidden decay;
c. hidden insect or vermin damage;
d. weight of contents, equipment, animals or people;
e. weight of ice, snow, sleet or rain which collects on a roof; or
f. use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included under items b., c., d., e., and f. unless the loss is a direct result of the collapse of a building.
Collapse does not include settling, cracking, shrinking, bulging or expansion. This coverage does not increase the limit applying to the damaged property.
Basement wall collapse: Does the word “foundation” seem ambiguous? How about if it is part of the basement? A court found that where an insured had a basement wall collapse during construction, the definition of “foundation” did not apply, and therefore, the insurance must pay. However, since the insurer first brought this up in refusing to pay the claim, the court indicated that the refusal to pay the claim was not “bad faith.”
Collapsing balconies due to decay: At times it is quite difficult to see how far an insurance provision can be “stretched” from what a layman would interpret. In at least one situation, where hidden decay and insect damage caused balconies to collapse, the loss was within the additional coverage for collapse despite the fact that the loss was also caused by the excluded peril of faulty maintenance or negligent construction.
Rotting floor joists do not constitute collapse: The insured brought suit against an insurer after it denied a claim for structural repairs to a home that were necessitated by rotting floor joists. The court held that the rotting of floor joists in a residential home that resulted in a downward movement of the home's first floor and separation of that floor from the walls did not constitute covered "collapse" under the terms of the homeowner's policy.
Basement wall collapse included under policy coverage: Damage to the insured's home caused by a collapse of a basement wall was found by the court to be included under policy coverage. The court reasoned that "collapse" in an insurance policy does not require the total destruction of a building, which would require the insured to await complete destruction before loss would be covered. The collapse of a 19-foot section of a 32-foot basement wall, which would eventually render the home uninhabitable, constitutes a collapse of a building as defined under the policy.
Improperly cemented sewer pipe connection: The insurer sought a declaration of no coverage for damage to the insured's home arising from leakage from an improperly cemented sewer-pipe connection. The court held that the policy's exclusion for a loss caused by constant water leakage barred "dwelling" coverage, but did not bar collapse coverage. Further, the faulty workmanship exclusion barred collapse coverage and only allowed recovery for damage to the sewer pipe itself.
Collapse caused by wet rot: A Homeowners policy, which covered collapse caused by "hidden decay," was held to cover collapse caused by wet rot although the policy excluded coverage for damage caused by "wet rot." "Wet rot" exclusion was “ambiguous” and therefore not applicable since the policy covered collapse from "hidden decay." The court looked to the dictionary definition of "collapse" and ruled that, although there was no "abrupt or sudden occurrence," the undisputed evidence was that the structural integrity of the house was compromised.
Roof collapse because of rot or neglect: Where there is a question of what caused a roof to collapse, the issue of whether damage to roof of an insured's mobile home was excluded under policy because of "neglect," or not covered because of "wet or dry rot," was a determination for the court, not appraisers. The appraisers were entitled, however, to determine the amount of loss attributable to personal property damages caused by mildew after collapse of roof, even though they did not see some of the property, which had been discarded because of its deteriorated condition.
Truss failure: The installation and subsequent failure of a truss system in a new home due to error in determining the strength requirement of the truss did not constitute "collapse" under Homeowners policy.
ACCIDENTAL WATER DAMAGE
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
12. Accidental discharge or overflow of water or steam, from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance. In this peril, a plumbing system does not include a sump, sump pump or related equipment.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
12. Sudden and accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system, or from within a household appliance.
Water damage from rotting wall: When there is water damage from a rotting and deteriorated wall, courts have generally adopted the intended interpretation of the policy. Reading together the provisions in the policy excluding damage to a foundation caused by water pressure and excluding damage caused by continuous leakage but covering loss caused by accidental discharge from a plumbing system, the court found "that the policy will cover some losses caused by leakage from plumbing systems ... but will not cover damage to the foundation caused by water pressure or from continuous leakage."
Accidental discharge provision does not cover structural or cosmetic damage: Foundation movement as a result of plumbing leakage was within the exclusion of the homeowners policy for loss caused by "settling, cracking, bulging, shrinking, or expansion of ... foundations;" the exception for ensuing loss caused by water damage does not apply to the foundation movement since the water damage was the cause, rather than the result, of the foundation movement. On appeal, the Fifth Circuit Court of Appeals affirmed, holding that the text in the policy's personal property section that provided coverage for "accidental discharge" could not be imported to provide coverage for structural and cosmetic damage to house specifically excluded under separate section of policy that covered damage to dwelling itself. The insureds could not create ambiguity by introducing evidence that policy permitted coverage for such claims prior to 1990 revision in policy; statement by the state Department of Insurance concerning ambiguity in policy was nondispositive; and text that eliminated foundation and structural damage exclusion under "accidental discharge" peril to personal property applied only to cases of personal property damage.
Broken waterbed: For smiles, a summary judgment in favor of the insured was reversed on a finding that the insured's waterbed, which broke while being filled and caused water damage, was not a "household appliance" within the ordinary meaning of that phrase nor was the leak from the waterbed a leak from a plumbing system.
CONTINOUS OR REPEATED SEEPAGE OR LEAKAGE OF WATER OR STEAM
ISO. COVERAGE B-Other Structures
We insure against risks of direct loss to property described in Coverages A and B only if that loss is a physical loss to property; however, we do not insure loss: ...
2. caused by: ...
e. constant or repeated seepage or leakage of water or steam over a period of weeks, months or years from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance;
Other Company.
1. We do not insure for loss to the property described in Coverage A either consisting of, or directly and immediately caused by, one or more of the following: ...
f. continuous or repeated seepage or leakage of water or steam from a:
(1) heating, air conditioning or automatic fire protective sprinkler system;
(2) household appliance; or
(3) plumbing system, including from, within or around any shower stall, shower bath, tub installation, or other plumbing fixture, including their walls, ceilings or floors;
Damage by water intrusion: The court directed a verdict in favor of the insurer where the insurer had an arguable, debatable basis for denying coverage for the insured's wall claim that resulted from the rotting and deteriorated condition of the wall. The overall structure of the policy provided coverage for damage caused by water intrusion that is immediate and accidental but excluded coverage for losses that resulted from long periods of decay and deterioration.
Plumbing leaks: The policy will cover some losses caused by leakage from plumbing systems but will not cover damage to the foundation caused by water pressure or from continuous leakage.
Concrete slabs: In many parts of the country, Florida, for instance, there rarely is a “foundation” per se, as houses are built on a concrete “slab.” In one particular case, the insurer had no duty to indemnify its insured for cracking and slow deterioration of the concrete slab upon which the insured's house sat, which was caused by high levels of sulfates in the soil and became evident nearly 20 years after the house was constructed. The damage was excluded under the policy that did not cover loss to property due to "seepage or leakage of water," "wear and tear," "deterioration," "inherent vice, latent defect," or "contamination."
Continuous seepage from plumbing: In the category of “sue and see what you get,” or perhaps, more simply, in the tradition of “Duh!” - the court held that an insurer is not liable for the "continuous or repeated seepage or leakage" from the insured's plumbing system, an excluded peril, on a theory that the efficient proximate cause of the leakage was a sudden break in the pipe. “All leaks necessarily involve breaking of the pipe.” (At last, the voice of reason…)
Where the insured's home was destroyed by a landslide caused by the city's negligent maintenance of a water main, the exclusion under the Homeowners policy for "defect, weakness, inadequacy, fault, or unsoundness" and "conduct, act, failure to act, or decision of any person, group, organization, or governmental body whether intentional, wrongful, negligent, or without fault" clearly excluded coverage. Furthermore, as the plumbing system at fault was not part of the residence, no coverage was available under the portion of the policy insuring for accidental leakage from a plumbing system. 45
ACCIDENTAL DISCHARGE OR OVERFLOW OF WATER OR STEAM
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
12. Accidental Discharge or Overflow of Water or Steam.... This peril does not include loss:
a. to the system or appliance from which the water or steam escaped,
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
12. Sudden and accidental discharge or overflow of water or steam ...
This peril does not include loss:
a. to the system or appliance from which the water or steam escaped;
Clean up after appliance failure: This provision can be called a “clean-up” provision, as it cleans-up after the previous provision, and states that if, for instance, a hot water heater leaks into a wall, causing damage, the damage may be covered, but the insurer will not buy a new water heater.
ACCIDENTAL WATER DISCHARGE – FREEZING
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions....
12. Accidental Discharge or Overflow of Water or Steam.... This peril does not include loss: ...
b. caused by or resulting from freezing except as provided in the peril of freezing below;
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
12. Sudden and accidental discharge or overflow of water or steam ...
This peril does not include loss: ...
b. caused by or resulting from freezing;
Keep the water pipes covered in the winter time.
ACCIDENTAL DISCHARGE OF WATER OR STEAM CAUSED OFF-PREMISES
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
12. Accidental Discharge or Overflow of Water or Steam,... This peril does not include loss: ...
c. on the residence premises caused by accidental discharge or overflow which occurs off the residence premises;
Other Company. No similar language.
Overflowing from neighboring land: This provision excludes any loss (direct, physical) from water coming from off the property because of accidental discharge or overflow. If a neighbor puts a retention pond in his back yard, and due to sudden Spring rains, it overflows onto your property, your Homeowners insurance will not cover the damage. (Of course, your recourse is to sue your neighbor and let his Homeowners insurance pay for it.)
OTHER WATER DAMAGES
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
13. Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water.
We do not cover loss caused by or resulting from freezing under this peril.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: .
13. Sudden and accidental tearing asunder, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water.
This peril does not include loss:
a. caused by or resulting from freezing;
b. caused by or resulting from continuous or repeated seepage or leakage of water or steam which occurs over a period of time and results in deterioration, rust, mold, or wet or dry rot.
If the hot water tank doesn’t leak, but “blows up”, it will be covered under the Homeowners policy.
FREEZING LOSSES
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
14. Freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance.
This peril does not include loss on the residence premises while the dwelling is unoccupied, unless you have used reasonable care to:
a. maintain heat in the building; or
b. shut off the water supply and drain the system and appliances of water.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ... 14. Freezing of a plumbing, heating or air conditioning or automatic fire protective sprinkler system or of a household appliance.
This peril does not include loss on the residence premises while the dwelling is vacant, unoccupied or being constructed, unless you have used reasonable care to: a. maintain heat in the building; or
b. shut off the water supply and drain the system and appliances of water.
Exploding water pipe: (Also discussed earlier) Damage to vacant rental property caused by flooding from burst water pipes that froze because of termination of electrical service constituted "explosion" and was a peril insured against under extended perils coverage in policy.
ELECTRICAL DAMAGE
ISO. COVERAGE C-Personal Property
We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in Section I-Exclusions.. . .
15. Sudden and accidental damage from artificially generated electrical current. This peril does not include loss to a tube, transistor or similar electronic component.
Other Company. COVERAGE B-Personal Property
We insure for accidental direct physical loss to property described in Coverage B caused by the following perils, except as provided in Section I-Losses Not Insured: ...
15. Sudden and accidental damage to electrical appliances, devices, fixtures and wiring from an increase or decrease of electrical currents artificially generated. There is no coverage for loss to a tube, transistor, wafer, card, chip, integrated circuit or similar electronic circuitry and components.
Loss from Artificial means as portion of total loss: Frequently losses can arise where losses from artificial losses are only a portion of the total overall loss. In those cases, the Homeowners insurer would be liable only for proportion of loss after excluded loss resulting from artificial causes.
Note the exclusion of damage to tubes, transistors, wafers, etc. Since so many appliances and machines are run by a computer, or have computer functions, it is safe to assume that there has been a lot of “surge” damage as many of the “chips” that actually function as the “brain” of a lot of appliances or machines, are small and cannot withstand any sudden surge from ordinary household current.
Injury to controls because of current failure: In one interesting case, it was left up to a jury to decide when there was a sudden and accidental injury to automatic controls caused by electrical current artificially generated, whether the damage resulting when the automatic controls failed to function properly, was within the coverage of the policy.
STUDY QUESTIONS
1. Personal property is covered under the Homeowners policy for
A. accidental loss to property only.
B. losses by any cause.
C. direct physical loss.
D. indirect or direct loss.
2. Mike drove home in a bad sand storm and in a hurry to get inside, he forgot to close the garage door. The wind and sand ruined some tools that Mike had in the garage. Does his Homeowners insurance cover this and why?
A. He has full protection under the policy – this is why he bought the policy.
B. No coverage. The sand did not enter the building through the force of the wind creating an opening in the building from which the sand entered.
C. He has partial coverage – those tools damaged only by the wind were covered.
D. His car and any tool or item related to the car would be covered, but not tools such as gardening tools and household tools.
3. Under a Homeowners policy, “three or more persons tumultuously assembled to commit certain acts…” is a description of ______________, which is ____________ under the policy.
A. a riot---not covered
B. a gathering --- covered for accidental direct loss
C. a riot --- covered for accidental direct loss
D. a mob --- a reason for immediate cancellation
4. Under which of the following situations would personal property be covered under the Vandalism or malicious mischief provisions of the Homeowners policy?
A. Bill usually fed some black bears. He left on vacation and his house was badly
damaged by the hungry bears.
B. The neighbor loses control of his new motorcycle, which crashed into the insured’s
house.
C. Persons unknown spray painted Nazi Swastikas on his house.
D. Someone stole a riding lawnmower from the garage.
5. A Homeowners policy covers theft of tools used in construction of dwelling, and tools were stolen from the contractors shed located next to the house under construction. Will the Homeowners policy cover this loss and why?
A. No. Tools and other materials used for construction are excluded – they would
probably be covered under the Contractor’s policy.
B. Yes. The Homeowners policy covers such theft as long as they are on the insured’s
property.
C. Yes. The Homeowners policy covers not only the insured’s property, but that of the
contractor also, until the home is completed and the insured has taken custody.
D. No. A residence cannot be covered under a Homeowners policy while it is under
construction in any phase.
6. Bruce is having his house and garage painted, so he moves his outboard motor boat to his sister’s garage temporarily, and while stored there, the outboard motor was stolen, along with his golf clubs, tennis rackets, and other personal items in the boat for temporary storage also.. His Homeowners policy
A. will cover the only the outboard motor as it was in temporary storage.
B. will cover only damage to the boat while at his sister’s house.
C. will not cover the outboard motor but will probably cover the other items.
D. will cover the motor and all of the personal property in the boat.
7. Under the “Collapse” coverage of a Homeowners policy, which of the following would be covered?
A. A basement wall that is not part of the foundation.
B. Rotting floor joists causing structural damage.
C. A rotting back porch that obviously had not been maintained to any degree.
D. A cracking foundation caused by the shifting of the clay soil around the house.
8. A leaking water pipe behind the basement wall of a home caused the foundation to crack. Is this covered under a Homeowners policy and why?
A. Yes, damage to a wall caused by continuous water leakage is covered.
B. No, damage to a wall caused by continuous water leakage is not covered.
C. Water damage of any type to a residence is specifically excluded.
D. Yes, damage to a basement wall is considered as structural damage to the foundation
and is covered under the policy, regardless of the cause.
9. Your neighbor builds a swimming pool next door. Due to torrential rains, it overflows into your back yard, entering your basement and generally causing quite a bit of property damage. Will your Homeowners policy cover this, and why?
A. Yes, your Homeowners policy covers water damage from uncontrollable sources.
B. Yes, your Homeowners policy will cover water damage caused by weather, i.e. torrential rains.
C. Yes, your Homeowners will cover this, as it was accidental.
D. No, your Homeowners excludes this peril. However, you can sue your neighbor.
10. Freezing of plumbing, heating or air conditioning is covered under a Homeowners policy, with certain exceptions (and reasonable care has been exercised in heating &/or shutting off the water supply and draining the systems and appliances). Which of the following is not excluded?
A. The dwelling is vacant.
B. The dwelling is unoccupied.
C. The dwelling is under construction.
D. The dwelling’s plumbing, heating or air conditioning pipes are in a concrete
foundation.
ANSWERS TO STUDY QUESTIONS
1C 2B 3C 4C 5A 6C 7A 8B 9D 10D