Court Determines Proximate Cause of Damage is Excluded

Regardless of the desires of people who buy insurance no insurance policy covers every possible cause of damage to real or personal property. First party property insurance policies insure against the risk of loss to described property by perils insured against. Some policies claim to insure against “all risks” of physical loss but still add exclusions to limit the coverages provided. Others insure against named perils. None cover everything and all exclude certain causes of loss, like earthquake, landslide and earth movement.

In Frank Valente and Darlene Valente V. Utica First Insurance Company, 186 ca 18-00861, 2019 NY Slip Op 04551, Supreme Court of the State of New York Appellate Division, Fourth Judicial Department (June 7, 2019) the Valentes attempted to gain coverage for damage caused to their home by the sinking of the ground under the dwelling.

THE SUIT

The appellate courts of New York are recognized for the succinctness of their opinions. In this insurance dispute the Appellate Division followed the rule of brevity.

The decision made was simply: “that defendant is not obligated to provide coverage to plaintiffs for the underlying claim…” It was arrived at by the following brief analysis.

Plaintiffs sued Utica First seeking, inter alia, a declaration that defendant is obligated to provide insurance coverage for damage to plaintiffs’ house pursuant to a homeowners’ insurance policy issued by defendant Utica. Utica appealed and plaintiffs cross-appealed from an order that denied Utica’s motion for summary judgment and denied that part of plaintiffs’ cross motion for a declaration that defendant is obligated to provide coverage to them for their underlying claim.

The Appellate Division, rather than attempting – as did the trial court – to reach a Solomon-like decision – agreed with Utica on its appeal. The court concluded that Utica is not obligated to provide coverage for plaintiffs’ underlying claim because the insurance policy’s earth movement exclusion applies to the damage caused to their home. Thus, the trial court erred in denying Utica’s motion, and the Appellate Division modified the order accordingly.

The insurance policy provided that “earth movement” included “earth sinking,” “shifting,” or “contracting” and that there is no coverage for damage cause by “earth movement.”

Even assuming that there was a sinking of the ground underneath the house’s foundation as opposed to erosion or washout, the Appellate Division concluded that such sinking nevertheless constituted earth movement that proximately caused the claimed loss.  The Appellate Division found that it is irrelevant that the earth movement may have been precipitated by the peril of above-surface downspout water, which is arguably covered by the policy, as opposed to sump pump leakage, which is excluded from coverage, because, regardless, it was the earth movement, not the flow of water, that proximately caused the damage to the house.

Since the earth movement exclusion applied defendant is not obligated to cover plaintiffs’ loss.

ZALMA OPINION

The exclusion for earth movement was clean, clear and unambiguous. The damage was caused by the movement of the earth, regardless of what precipitated the earth movement, and since earth movement was excluded there could be no coverage for the loss. Sad, for the homeowners, but exactly an application of what the contract promised and what it did not promise.

---

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Excellence in Claims Handling Courses From Experfy.com

The Excellence In Claims Handling program provides everything a person or entity presenting a claim needs to effectively present the claim and provides the insurance claims person with everything he or she needs to properly represent the insurer.
The insured, risk manager, or corporate counsel will be able to present a first party property claim – whether a fire, theft, or windstorm or some other insured against cause – with little difficulty and professionalism and present a sworn proof of loss acceptable to an insurer.

The insurance claims person completing the course will be able conduct a thorough investigation of the policy and claim. The insurance claims person will also be able to assist an insured to fulfill all of the promises made by the insured to the insurer and the insurer to provide the indemnity promised by the insurance policy.

The series of courses was designed so that the student can obtain the needed information easily while he or she sits down in the morning for a first cup of coffee or any other time in the day in short, easy to consume lessons. For instance “Insurance and Claims” is made up of three modules and 27 lectures while “Investigating the Property Claim” is made up of four modules and 65 lectures. You can review each course, each module and each lecture at the links below.

Each person completing the course will be able to claim that he or she is a professional first party property claims person ready to provide excellence in claims handling and be ready to resolve any claims problem that arises for the benefit of the insurer and the policy holder.

Insurance and Claims: https://www.experfy.com/training/courses/insurance-and-claims

Investigating the Property Claims: https://www.experfy.com/training/courses/investigating-the-property-claim

Insurance Law: https://www.experfy.com/training/courses/insurance-law

Solving Claims Problems: https://www.experfy.com/training/courses/solving-claims-problems