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Opposing Views: Any Movement versus Natural and Catastrophic

Summary: Property policies generally exclude earth movement as a cause of loss. What constitutes earth movement for purposes of the exclusion? There are two views that have been developed in the courts: (1) damage only from natural and catastrophic earth movement is reached by the exclusion, or (2) any damage attributable to earth movement is excluded. The former is currently the majority position. Under this view, for example, damage caused by vibrations from passing logging trucks transmitted through the ground has been held covered; under the other position, such damage would be excluded. This discussion examines the case law regarding this issue.

Topics covered: Introduction Naturally caused catastrophic earth movements are excluded Any earth movement excluded Efficient proximate cause Third party negligence

Introduction

A standard feature of property insurance forms is the exclusion of loss associated with earth movement. The following, for example, is the earth movement exclusion clause (with the concurrent causation language lead-in) as found in the Basic, CP 10 10 06 07 , Broad, CP 10 20 06 07 , and Special, CP 10 30 06 07 , Causes of Loss forms of the commercial property program of Insurance Services Office (ISO).

B. Exclusions

1.We 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.

But if Earth Movement, as described in b.(1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.

(5)Volcanic eruption, explosion or effusion. But, if volcanic eruption, explosion or effusion results in fire, building glass breakage or Volcanic Action, we will pay for the loss or damage caused by that fire, building glass breakage or Volcanic Action.

The ISO Homeowners form HO 00 02 05 11 contains the following exclusion for earth movement:

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. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

2.Earth Movement

Earth Movement means:

a.Earthquake, including land shock waves or tremors before, during or after a volcanic eruption;

b.Landslide, mudslide or mudflow;

c.Subsidence or sinkhole; or

d.Any other earth movement including earth sinking, rising or shifting.

This Exclusion 2. applies regardless of whether any of the above, in 2.a. through 2.d. is caused by an act of nature or is otherwise caused.

However, direct loss by fire, explosion or theft resulting from any of the above, in 2.a. through 2.d., is covered.

The introductory paragraphs to these exclusions preclude loss caused directly or indirectly by the excluded peril, and regardless of any other cause or event that contributes concurrently or in any sequence to the loss. This language was introduced in 1983 to address the evolving doctrine of concurrent causation. (See Concurrent Causation and Efficient Proximate Cause .)

Naturally Caused Catastrophic Earth Movements Are Excluded

While the ISO homeowners form now states that the exclusion applies whether caused by an act of nature or otherwise, that language was not always in the policy. A majority of jurisdictions hold that the term “earth movement” applies only to naturally occurring phenomena of a catastrophic nature. Apparently, the original earth movement exclusion was added to property coverage forms as a result of the San Francisco earthquake of 1906. Subsequently, the earthquake exclusion was broadened to include other catastrophic events such as landslides. Courts adhering to a historic view of the exclusion generally limit the exclusion to natural and catastrophic earth movement.

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